A one or two per cent hike in insurance premium tax (ITP) could lead to up to 20,000 UK job losses, the National Campaign Against Insurance Premium Tax (NCAIPT) has warned.

NCAIPT project director Philip Allott said an independent survey by international credit insurer NCN showed a premium tax rise above its current 5% could lead to the redundancies.

"A significant number of companies, particularly small to medium-sized businesses, would drop credit insurance as a means of trade protection," Allott said.

"If that were the case then, given the current squeezed credit margins, insurers would be unable to absorb the cost of further rises.

"The result would be millions of pounds of uninsured trade at risk of non-payment.

"Scores of bankruptcies would be the logical conclusion, with consequent job losses."

The independent survey was done on a nationwide cross-section of 170 domestic credit insurance buyers and showed that nearly one in five businesses were not confident about renewing their insurance if the IPT rose by even one per cent. More than one in three said they would be adversely affected by a rise.

NCAIPT is writing to MPs to make them aware of the survey results.