Businesses could face £500m premiums from IPT changes
Another increase in Insurance Premium Tax (IPT) will be a double blow for business at a time when the UK economy faces a so called ‘cocktail of threats’ , the Association of British Insurers (ABI) has said.
The warning follows the decision to increase insurance premium tax by more than 50 percent - from 6 percent to 9.5 percent - at the summer 2015 budget, raising £8 billion over five years. This is the biggest revenue raiser in the budget.
New figures published show that last November’s IPT increase could cost business nearly £500 million in higher commercial insurance premiums, according to the ABI.
The association also said that increases could lower spending power of customers, with many families facing insurance bills around £100 higher as a result of the last increase.
James Dalton, director of general insurance policy, ABI, said: "Insurance Premium Tax is a tax on businesses that will hit companies that do the right thing. It could drive up costs of commercial insurance at a time when economic risks are growing.
“Unlike VAT, no element of IPT can be reclaimed by businesses meaning they will have to absorb these extra costs – this could cost jobs, drive up prices or companies may decide to reduce cover, putting them at risk if something goes wrong.”
He added: "On top of all this a rise in IPT hits demand by reducing consumer spending power. The IPT increase last November could cost business in the UK about £500m. Another rise on top of this would be a double blow for business."
