Insurance Premium Tax Hit in Latest UK Budget
Chancellor Osborne raids the insurance industry for funds, increasing the Insurance Premium Tax from 9.5pc to 10pc.
In a surprise move for the industry, Chancellor George Osborne increased the insurance premium tax from 6pc to 9.5pc. The new rate, which comes into effect this November, will hit policies ranging from home and private car to business insurance. The move is seen as a raid on a soft target that is expected to raise up to £1.75bn a year for the Treasury. Travel insurance, already taxed at 20pc, is not affected by the move.
The British Insurance Brokers' Association (Biba) said it was "extremely disappointed" with the move and described the rise as a "stealth tax."
It should be noted however, that the British IPT is still below rates charged by many European countries - Germany, for example, charges 19pc.
The increase in tax rate only applies to premiums written on or after November 1st and does not affect premiums written before that date paying via direct debit.
If you are concerned as to how the change in insurance premium tax affects you, please contact the Abaco Team.
The Abaco Team