IPT doubles in less than 18 months with UK government’s new proposals

The UK government plans to raise the insurance premium tax (IPT) from 10 percent to 12 percent, doubling the tax payable by customers on general insurance policies in the past 18 months, as revealed in the Autumn Statement.

It marks the third rise in IPT since the government's Summer Budget in 2015, and according to the Association of British Insurers (ABI), the three increases together will raise £13 billion for the government over the next five years.

The IPT affects over 50 million policies and applies to cover purchased by businesses, charities and individuals.

Former Chancellor George Osborne had raised IPT from 6 percent to 9.5 percent in the Summer Budget in July 2015, which then came into effect in November the same year.

It was raised a second time in the March Budget of 2016 to 10 percent, which came into effect October 1st.

Among the lines of businesses affected, the three IPT increases had raised the average policy cost for motor, specifically private car comprehensive cover, by £25.79.

For property lines, the IPT has raised the average policy cost of combined building and content cover by £18.95.

For pet insurance, the average policy cost for cat and dogs has increased by £12.63 and £21.82, respectively.

For private medical insurance (including cash plans), the average policy cost for personal has raised by £129.37 and corporate by £64.2.