Amidst the clamour surrounding last year’s divisive (and final) Autumn Statement, you might have missed the news that the standard rate of Insurance Premium Tax (often abbreviated to IPT) was increased from 10% to 12%, effective from 1st June 2017.
As is often the case, time seems to have moved rather quickly since then. With the increase less than a month away it’s worth considering completing any insurance purchase you may have been putting off. Of course, if you already have insurance in place then you have nothing to worry about (although you might want to warn a friend or two!)
Although an increase of 2 percentage points may not seem overly drastic, it’s certainly worth putting in to context. Between 1997 and 2011 IPT increased by just 1 point (from 4% to 5%). In the 6 years since then it has more than doubled to its current figure. As Edmund King, president of the AA, noted: “In 18 months, tax on insurance will have doubled – no other tax has increased by that much.” It gives credence to the soundbite circulating before the Autumn Statement – IPT, undoubtedly, is now the UK’s “fastest growing stealth tax.”
Will it lighten the coffers of the insurance industry? Of course. But any business worth its salt these days will have factored in such an increase some time ago. It’ll be the wallets of the average man or woman that will feel considerably lighter. As the ABI (Association of British Insurers) noted after Mr. Hammond’s announcement last November, the increase will be a “hammer blow for the hard-pressed.”
Recent estimates put the number of general insurance policies active in the UK at around the 50 million mark, across cars, homes, private medical insurance and myriad other sectors. On that scale, a 2 point increase is likely to bring in significant funds for any governing party. Whilst you’d hope the reasoning behind any such decision was sound and thoroughly thought through, the feeling that the Chancellor and his colleagues are picking the pockets of the general public still persists.
Amanda Blanc, group CEO of AXA, was not wrong when she said the hike represented an unwarranted attack on millions of people simply looking to protect themselves:
“This is a classic case of the government giving with one hand, in the form of whiplash reforms, and taking with another,” she said. “The affordability of insurance is being fundamentally threatened. The country is already underinsured and ever rising insurance taxation could have the unintended consequence of making this situation even worse.”
So what should you do? Ultimately, insurance is a necessity for many people. Whether it’s putting your car on the road, looking after the contents of your home, or making sure you have the right cover to enable you to carry out your work, it’s something you’ll have to consider.
Two things are certain. IPT will increase on 1st June. The other? Kingsbridge will always provide great service. No matter what rate IPT sits at, purchasing your insurance with Kingsbridge will protect you and your career. Our dedicated customer service team are always happy to answer any questions you might have, and we guarantee you won’t find the same cover at a better price anywhere else (we even have a price promise.)