UK insurers and brokers have applauded the UK Treasury’s decision not to raise premium taxes, which currently has an annual price tag for each household of an average of £200 ($256.40), according to the Association of British Insurers (ABI).
The ABI is pleased that the Chancellor of the Exchequer “has done the right thing by not increasing [the] insurance premium tax,” said Huw Evans, director general, ABI.
“IPT already brings in more than £6 billion [$7.7 billion] a year for [the] government and it would have sent out completely the wrong message to increase costs any further for people who do the right thing by buying cover to protect themselves, their properties and their families,” he added.
While the British Insurance Brokers’ Association (BIBA), welcomed the move, CEO Steve White said it amounted to a pyrrhic victory.
“We welcome Philip Hammond’s decision not to change the current rate already at a significant 12 pence in the pound of every premium paid,” said White.
“However in a way this amounts to a pyrrhic victory, and we will not stop campaigning for government to freeze, if not reduce, this rate of tax on insurance for the remainder of this parliament,” he added. “We continue to highlight to the highest level of government the dire consequences of a tax that potentially reduces access to insurance.”
BIBA called the IPT a tax on protection and has campaigned for it to be frozen in its lobbying, media work and social media campaigns.
Quoting the Social Market Foundation, on Oct. 10, the ABI said, the IPT currently costs each household £200 on average. “A raid on the responsible is the wrong way to balance the books,” said Evans in the Oct. 10 statement.
On Oct. 26, the ABI said that official tax receipts for August show IPT raised a massive £1.35 billion ($1.7 billion) for the government in a single month – the highest amount ever and £200 million ($256.4 million) more than it raised in August 2017.
The IPT for the last 12 months has now hit £6.13 billion ($7.9 billion), more than that brought in by taxes on beer, wine or gambling in the same period, said the ABI. The Treasury predicted revenues of £6 billion ($6.7 billion) from IPT for the financial year 2018/19, so these new figures suggest that taxpayers are paying even more than expected, according to the ABI.
Source: Association of British Insurers/British Insurance Brokers Association
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