In Wednesdays’ Budget The Chancellor of the Exchequer, George Osborne, announced that Insurance Premium Tax (IPT) would increase from it’s current level of 6% to 9.5% in November 2015. The IPT rate for single and holiday travel insurance will remain at 20%.
For example this would mean on a a typical £300 UK issued insurance policy, before the increase , would increase to £309.91 – assuming no other changes on the policy.
Insurance Premium Tax was introduced in 1994 at 2.5% and has been set at 4%, 5% and 6% since then.
UK insurance premiums for car, home and commercial on average are near historical lows, (believe or not) so if you have not reviewed your insurances lately why not contact us and let us find you insurance that improves your cover and reduces your premium with the tax on it. As most UK insurance buyers will not be able to escape IPT.
Important not to reduce protection
The increase in IPT is expected to raise up to £1.75bn per year for the Treasury, and there is a widespread belief that IPT rates will eventually be aligned with those for VAT so future increases may well be on the cards. For now though, the Government has attempted to justify this latest rise by stating that IPT rates in the UK are still among the lowest
Whilst the new IPT rate will push up the cost of business insurance, the advice to all is to resist the obvious temptation to counteract this by reducing protection. Making sure that the correct cover is in place remains as important as ever.
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