Insurance premium tax – significant rise

Tue 14 Jul 2015

The rise in IPT came as something of a surprise in the Summer Budget. The last increase to the standard rate was back at the start of 2011 from 5% to 6%. The increase to 9.5% means that this tax has nearly doubled over the past 4 years at a time when taxes have generally been cut for businesses. The government released a paper 18 months ago called “The UK insurance growth action plan”. It talks about the vital contribution that the insurance sector makes to the UK economy, but nowhere does it contemplate the raising of IPT. Clearly the government believes that the insurance sector’s vital contribution could be higher.

At the same time as legislating for the so called “five year tax lock” for no increases to income tax, national insurance, and VAT, the Chancellor has here increased tax on everyone. Indeed, some might call it a “stealth” tax.