When Insurance premiums increase, clients are quick to blame us or the industry, but when the government introduced IPT – Insurance Premium Tax on all insurance premiums, we knew this was going to be an increasing \\\”stealth\\\” tax.
The Insurance Premium Tax (IPT) was announced by Kenneth Clarke in the November 1993 Budget and raised approximately £2.3 billion in the fiscal year 2009/10.[
With such results, my prediction was that it wasn\\\’t going to end there and personally I wouldn\\\’t be surprised if it does not end up the same rate as VAT one day! Over the years we have seen a steady increase:
- 1 April 1997 to 30 June 1999 – a standard rate of 4 per cent;
- 1 July 1999 to 3 January 2011 – a standard rate of 5 per cent.
- From 4 January 2011, the standard rate rose to 6 per cent.
- From November 2015 9.5%
Our trade body the British Insurance Brokers\\\’ Association BIBA have not taken this lying down and issued a statement immediately as follows:
|08 July 2015|
|BIBA response to the rise in Insurance Premium Tax|
In response to the rise to 9.5% of Insurance Premium Tax (IPT), BIBA CEO, Steve White, said:
“We are extremely disappointed in this rise in Insurance Premium Tax and will mean insurance will become more expensive for the public as a result. Those hit by this stealth tax will include the 20.1 million households with contents insurance; 19.6 million with motor insurance and 17 million with buildings insurance.
“The Government has been working with the industry to reduce the cost of insurance for consumers – including a summit chaired by the Prime Minister. It therefore seems counterintuitive to be taking measures which will add to the cost – effectively taxing protection.
“We hope the Government will review this rise and correct it in further budgets.”
Notes to editors
2. About British Insurance Brokers\\\’ Association
The British Insurance Brokers\\\’ Association (BIBA) is the UK\\\’s leading general insurance intermediary organisation representing the interests of insurance brokers, intermediaries and their customers.
BIBA membership includes just under 2,000 regulated firms having merged with the Institute of Insurance Brokers (IIB) in November 2011.
General insurance brokers contribute 1% of GDP to the UK economy and BIBA brokers employ more than 100,000 staff.
54% of all general insurance is sold by an insurance broker and they arrange 79% of all commercial insurance business.
Insurance brokers put the client’s interests first, providing advice, access to suitable insurance protection and risk management.
BIBA helps more than 400,000 people a year to access insurance protection through its Find a Broker service, both online and via the telephone.
BIBA is the voice of the industry advising members, the regulators, consumer bodies and other stakeholders on key insurance issues.
I would be keen to hear your thoughts on this \\\”quiet\\\” aspect of the budget.