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Autumn Statement: Hammond raises IPT to 12pc
Written by Deborah Ritchie
Delivering his first Autumn Statement today, Chancellor Philip Hammond announced a 2pc rise in insurance premium tax to 12pc. Although the insurance industry has not welcomed today's announcement, it was not entirely out of the blue. Insurers have been predicting a trend of IPT ultimately aligning with the UK’s 20% VAT rate.
Commenting on the IPT rise, PwC insurance tax partner, Benjamin Flockton, said: "Between October 2015 and June 2017, we will have seen a doubling in IPT rates from 6% to 12% and we expect further rises in years to come."
"If these are passed on to the man on the street, we expect around £25 in extra tax will be added to the cost of the average motor insurance bill"
BIBA said this regressive tax is “outrageous and is a tax on protection which will hit everyone and especially the so-called JAMS (or those ‘just about managing’). “We believe that this increase is contrary to the stated policy of HM Revenue and Customs 'that IPT should make the required contribution to HM Government revenue while minimising the effect on the take up of insurance'.
"This increase comes at a time when both motor and home insurance premiums are rising and our fear is that many of those who most need it will avoid taking up insurance and be unable to afford the protection they need,” the association stated.