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British insurers fume at latest tax rise

UK insurers and brokers have attacked the Government’s plan to again increase the insurance premium tax (IPT), this time by 2%.

The tax rate will have doubled in two years, rising in July last year from 6% to 9.5%, then to 10% in the March budget and now to 12% in the autumn statement – effective from July 1 next year.

The British Insurance Brokers’ Association (BIBA) has called the rise “outrageous” and “regressive”, particularly hurting people who are “just about managing” – a phrase coined by Prime Minister Theresa May to describe a group she purports to be helping.

“We believe this increase is contrary to the stated policy of HM Revenue & Customs that ‘IPT should make the required contribution to government revenue while minimising the effect on the take-up of insurance’,” BIBA says. The increase comes at a time of rising home and motor insurance premiums and will discourage take-up, it warns.

Association of British Insurers Director-General Huw Evans calls the rise “a hammer blow for the hard-pressed. It will hit consumers and businesses alike, hurting those who buy business, motor, property, pet and health insurance.”

The Government says the IPT is “a tax on insurers” and it is up to them whether they pass it on to consumers.