Budget: Industry reacts to IPT decision

The British Insurance Brokers’ Association has welcomed the new chancellor's approach to Insurance Premium Tax. Not changing the current rate, which is already at a significant 12 pence in the pound of every premium paid, will help businesses and consumers to afford the insurance protection they need, it said

CEO, Steve White, said: “We will, however, bear in mind that the chancellor has not explicitly frozen the rate and we will continue to campaign for government to freeze, if not reduce, the rate of IPT for the remainder of this Parliament.

"We will also continue to highlight to the highest levels of Government the dire consequences of a tax that potentially reduces access to insurance. In our 2020 Manifesto – Access, BIBA highlighted research by Zurich that shows a correlation between steady increases in IPT and a decline in the uptake of insurance. Because of this, as well as freezing the rate we believe targeted tax relief on both cyber insurance and telematics-based motor insurance would alleviate this trend.”

The Chartered Insurance Institute felt short-changed by the decision, however. Its managing director of engagement, Keith Richards, explained: “While it is understandable that the government’s focus is on the immediate financial needs of people and businesses affected by the coronavirus it is important that the Autumn Budget focuses on more measures to make sure people have enough cash to last a lifetime.

“The increase to the national living wage and annual allowance for pension saving won’t stop people sleepwalking into a care funding crisis or running out of cash in retirement.

“We hope the government will review ways to improve access to financial advice and guidance for all. I hope the review of insurance premium tax, that was announced in the Budget, will result in this levy being axed as it has increased the cost of cover for consumers.

“The government’s coronavirus measures recognise that many individuals and businesses lack a financial safety net. The government needs to rethink insurance premium tax and make sure individuals as well as businesses can afford to access insurance that will assist them if work is disrupted, travel plans have to be abandoned or loved ones die.”

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