Insurance premium tax (IPT) will be increased by 0.5 per cent, the Chancellor has confirmed in today’s Budget.
IPT now stands at 10 per cent, impacting private medical insurance (PMI) and other insurances, following an increase from 6 to 9.5 per cent from 1st November 2015. The increase means year on year, insurance buyers face an increase in tax of 66.6 per cent since March 2015.
Chancellor George Osborne said revenue raised by the increase would go towards flood defences, raising £700m to protect housing from flooding.
The healthcare industry has repeatedly called for PMI to be exempted from IPT.
BIBA CEO Steve White says: “Let’s be clear about this IPT is a tax collected and remitted by insurers, it is a tax on premiums paid by policyholders –motorists, householders, and businesses large and small. Whilst we support the additional spending on flood defences we believe that this could have been funded by the projected £1.5bn annual funds paid to the exchequer as a result in the increase in IPT put in place only last November which puts an increased burden on policyholders many of whom are suffering from ongoing flood damage.”