Chancellor George Osborne said the IPT, first introduced by the Tories in 1994, would be raised from its current 6 per cent rate to 9.5 per cent beginning in November. Travel Insurance, which already commands a 20 per cent tax will not be affected.
Osborne said in an era of falling premiums that households would not notice the huge 58 per cent tax increase. He also made the point that IPT was still far lower than that paid in other parts of Europe such as Germany with 19 per cent.
Graeme Trudgill, executive director of the British Insurance Brokers Association, said he is “deeply concerned” by the increase which will mean more expensive premiums for both consumers and businesses.
That included, he said, 4million SMEs, 20.1million households with contents insurance, 19.6million with motor insurance and 17 million with buildings insurance.
“The proposed increase will hit household budgets and put people off making provision for themselves in order to manage their risks properly,” Trudgill said. “This is a tax on protection that will be an issue for businesses that are already squeezed right now.”
In the next instalment from our upcoming Business Today feature on the rise in insurance premium tax Peel Hunt analyst Anthony Da-Costa considers the impact on our listed insurance firms...