Business hit out over "stifling" increases in insurance premium taxes coming into force today

 
Mark Sands
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The UK will head to the polls on 8 June. (Source: Getty)

Ministers risk “stifling” small firms with a risk in insurance premium tax (IPT) coming into force today.

IPT has risen to 12 per cent, but business groups have hit out at the rising bills faced by the UK’s employers.

The Association of British Insurers has estimated the new tax rate could add an extra £300 to commercial insurance premiums.

The Federation of Small Businesses is among groups calling on the next government to reject further hikes in IPT over the next parliament. The CBI has made similar demands.

FSB national chairman Mike Cherry said: “The doubling of IPT over the past five years is hitting our members, directly increasing insurance costs at a time when the costs of doing business are at their highest since summer 2013.”

ABI director of general insurance policy James Dalton agreed: "This latest hike must be the last. The next government must freeze this tax, to give hard working households and businesses a break."

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British Chambers of Commerce head of economics and business finance Suren Thiru told City A.M. the increase was a “stealth tax” on firms.

“The rise in IPT comes at a time when there are a range of other increased costs businesses are facing,” he said, citing the national living wage, a migration skills charge, the apprenticeship levy and controversial increases to business rates.

“The next government should look seriously at committing to no new upfront costs and taxes over the life of the next parliament,” Thiru said.

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It comes as concerns emerge over delays to business rates relief, causing “panic” for small firms across London.

Business rates were revaluated in April and are sky-rocketing for many companies in London.

Chancellor Philip Hammond promised funding of £300m for councils to give to businesses hardest hit by the property tax revaluation.

However, there are concerns businesses are not receiving the relief, despite £25m of funding to be distributed this year.

The London borough of Tower Hamlets has said it is waiting for ministers to confirm regulations around the scheme before it will be able to distribute funds, according to business rates specialists CVS.

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