The Autumn Budget will be announced on 29 October
Aviva is calling on the government to freeze insurance premium tax (IPT), claiming two thirds of Britain’s SMEs might be forced to cut or reduce non-mandatory insurance.
The insurer warned this might be the case if IPT increases ahead of the Autumn Budget on 29 October.
In a recent research study it found that an IPT increase would see 31% of SME owners reduce non-essential cover, while 36% would drop these insurance covers altogether.
The research was conducted by Censuswide of more than 325 SMEs in October this year.
The government took almost £6bn from Insurance Premium Tax in the year ending 31 July 2018. The previous year it increased the IPT rate from 10% to 12%.
Phil Bayles, managing director, UK intermediaries at Aviva, said: “The government has already doubled the rate of IPT over the last three years, and businesses have shouldered this burden.
”But as our research clearly shows, a further increase in IPT could force the majority of SMEs to put themselves at risk of underinsurance or, worse, forego cover for vital but non-mandatory insurance such as Business Interruption.”
He pointed out that the government has “rightfully noted” that small businesses are the engine of our economy, fuelling growth and employment.
At a time when there is already great economic uncertainty due to Brexit, he said Aviva is deeply concerned that another increase in IPT could have lasting impacts on this part of Britain’s economic future.
He added: “Imagine a small business that is already financially stressed and decides to cut non-essential insurance due to rising costs. Without the security that insurance provides, they are one accident away from going out of business.
”And unlike VAT, a small business cannot claim back IPT. We must not place this important sector at such great risk.
“We know this is not the intent of the government. And so we urge the government to consider the serious impact any increase in IPT will have on SMEs, and freeze insurance premium tax for the remainder of this Parliament.”
Ecclesiatical recently announced that it has teamed up with Charity Finance Group to campaign ahead of the budget urging the Chancellor to make charities exempt from IPT.
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