24 November, 2016
Increase in IPT to 12%
A further rise in the rate of standard UK Insurance Premium Tax (IPT) was announced yesterday by the Chancellor Philip Hammond in his Autumn Statement. Effective 1st June 2017 the rate of IPT charged on most insurance premiums will increase to 12%.
Organisations and individuals faced a hike in IPT when the government increased the rate from 6% to 9.5% effective 1st Nov 2015. This was increased once more to 10%, which came into effect on the 1st Oct 2016.
Simon Hickman, Access’s CEO commented: “It is disappointing to see the government take aim at organisations and individuals who have a responsible attitude to risk, who have chosen to pay to protect their assets and liabilities. This is not a tax on insurers but a tax on policyholders.”
Chris Newberry, Underwriting Manager at Access, noted: “We already know that we have a major problem with under-insurance in this country. As IPT is increased for the third time in less than two years, it is inevitable, in some cases, that this will directly result in organisations reducing the types of cover and limits which they purchase in an attempt to counter the increases in their premiums. In the longer term, this may well lead to organisations finding they don’t have the cover they need when they suffer a loss and need to make a claim”.
Providing insurance for charities is one of our key specialisms. Simon Hickman notes that he is concerned that as charities face continued pressure on their finances, having adequate insurance in place will become less of a priority. “Charities have faced tough financial challenges in the last few years, especially with the reduction in government funding for non-profit organisations. I am particularly concerned about the impact this additional IPT increase will have on charities and suggest that charity bodies lobby government to have charitable organisations IPT exempt.”
Access advise our clients on arranging sufficient insurance coverage. We work with a range of specialist insurers to provide adequate insurance at competitive premiums. Please speak with us to see how we can assist your organisation to review costs as we approach a further rise in IPT.