Latest figures show a 10% increase in windfall for the Treasury last December
ABI calls for a cut in the ‘mother of all stealth taxes’
The Association of British Insurers (ABI) is urging the Government in its forthcoming Budget on 11th March 2020 to cut the rate of Insurance Premium Tax (IPT) and ease the squeeze on families and businesses who do the right thing by taking out insurance.
The Government currently earns more from IPT than it does from many of the ‘sin’ taxes, such as the duties on beer, wine, spirits or betting and gambling.
According to latest figures., during last December 2019 alone the Government raked in £560 million from the tax, up 10% on the previous December. This was significantly more than tax revenue from beer (£324 million), spirits (£250 million) and betting and gambling (£349 million) in the same month. This shows a significant increase from a monthly average of £274m IPT income in 2015.
The standard rate of IPT has doubled since 2015, most recently going up from 10% to 12% in June 2017. It applies to the vast majority of policies sold, including property, motor, health (including cash plans), pet and business insurance
According to ABI analysis of latest figures from the Government:
- Total IPT revenues for government between 2015 and 2019 have jumped by 98%.
- In 2018/9 alone, IPT raised £ 6.3 billion, far exceeding the income from taxes on beer (£3.6 billion), wine (£4.3 billion), spirits (£3.7 billion) or betting and gambling (£2.3 billion)
Huw Evans, Director General of the ABI, said:
“Hard working and responsible families and businesses deserve a break from the IPT burden which pushes up the cost of insurance without people noticing. This tax hits the poorest the hardest on products that most people need like motor or home insurance. It also penalises people for doing the right thing and saving the state money, while taxes on alcohol and gambling have stayed low.
“The Treasury’s rate of IPT is the sixth highest in Europe and hits our international competitiveness at a time when the UK needs to be making itself more globally attractive.”