Industry opposes rumoured IPT rise in emergency budget
The Times speculates that the government will at least double the 5% tax rate on general insurance premiums in this month’s emergency Budget.
It would raise billions of pounds but would drive up the cost of policies and could force some people to stop buying essential protection, experts said.
Travel and extended warranties carry a 17.5% tax rate and some industry experts fear that the government could increase all rates to that level.
The Treasury generates an estimated £2.3bn in annual tax revenues from the existing 5% levy. Increasing it to 17.5% could raise as much as £8bn.
The 5% tax rate in the UK compares favourably with Germany, at 19%, Italy, at 21.25%, and France, at 9%.
The British Insurance Brokers Association (Biba) and the Association of British Insurers (ABI) said that they would be lobbying the Treasury in the run-up to the emergency Budget on June 22 not to increase the tax.
Eric Galbraith, Biba’s chief executive, said: “One of our biggest concerns is that this could begin a trend for ‘easy’ taxes. This is not the way to go about it. This would be a further tax on people’s and businesses’ ability to protect themselves.”
Cash-strapped businesses had not been buying enough insurance protection in the wake of the banking crisis.