Insurers fire shot across Treasury's bows, urging chancellor Philip Hammond not to hike insurance premium tax again

 
Oliver Gill
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Insurance premium tax has increased from six per cent in October 2015 to 12 per cent by 1 June 2017 (Source: Getty)

The UK's biggest insurance body has called on chancellor Philip Hammond not to "punish" the British public by hiking insurance premium tax (IPT) for the fourth time in two years.

The government has doubled IPT to a rate of 12 per cent in less than 18 months, with the most recent two percentage point rise taking effect from 1 June.

Fears have grown that another increase is on the cards in the 2017 Autumn budget. Over the weekend it was reported Hammond is eyeing a fresh increase as a stepping stone towards bringing IPT into line with the current 20 per cent VAT rate.

Today, the Association of British Insurers (ABI) will launch a new video campaign that associates increased IPT with fining the public for doing the "right thing" such as locking the front door or driving carefully.

Read more: Business hit with "stifling" increases in insurance premium taxes

“Taxing insurance premiums means punishing people who do the responsible thing," said ABI director of general insurance policy James Dalton.

No-one would think it reasonable to fine people for clearing up after their pets, securing their homes or driving carefully. It is no more acceptable to penalise people who sensibly invest in insurance cover for themselves, their families and their belongings.

Repeatedly putting up Insurance Premium Tax impacts hardest on the poorest and it’s time for the chancellor to end this raid on the responsible and commit to no further increases this parliament.

The Treasury declined to comment.

Insurance premium tax – how rates have changed

Date changed IPT standard rate
4 January 2011 6 per cent
1 November 2015 9.5 per cent
1 October 2016 10 per cent
1 June 2017 12 per cent

Read more: AA blasts government over discount rate impact on car premiums

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