Ease this 'Raid on the Responsible' Now - The ABI Calls on the Government to Reduce Insurance Premium Tax
- Insurance Premium Tax now equates to an average of nearly £100 to motor and combined buildings/contents home insurance policies.
- It is likely to hit the poorest the hardest who spend proportionately more on insurance, such as motor and home.
The Association of British Insurers is urging the Chancellor to reduce the rate of Insurance Premium Tax (IPT) in next week's Autumn Statement to help millions of households and businesses manage their rising insurance costs.
For motor and home insurance alone, IPT now typically equates to £98 a year. For a couple with other insurances such as health cover, this figure could jump to £500 a year.
IPT applies to most general insurance policies including motor, home, pet, and private medical insurance. The standard rate has doubled to 12% since October 2015. It is likely to hit the poorest the hardest who spend proportionately more on insurance, such as home and motor.
Examples of IPT
For a single person with a car (1x motor), renting a flat (1x contents only) and travel insurance (1x travel) – this equates to £87.11 of IPT.
For a couple with 2 cars (2x motor), their own home (1x combined property), a pet (1x pet) and both with travel cover (2x travel) – this is £231.21 of IPT. If one of them had personal PMI (i.e. not through work) this would equate to £500.70 of IPT.
Last year, the tax made £7.45 billion for the Government. Since its introduction, IPT has increased more rapidly than the tax rate applied to alcohol and gambling and has had comparable rises to tobacco duty.
“Insurers are doing all they can to offer competitively priced insurance, despite facing some substantial increases in costs outside of their control. Now has never been a better time for the government to show its support to the millions of homeowners and businesses who do the right thing by protecting their families and livelihoods against sudden financial shocks, than to reduce Insurance Premium Tax.”
Mervyn Skeet
the ABI’s Director of General Insurance Policy