UK Insurance Premium Tax increases again to 12%

As justification, the UK's Chancellor said in his Autumn Statement to Parliament that IPT in the UK "is lower than in many other European countries, and half the rate of VAT". However, the Association of British Insurers (ABI) noted that the standard rate of IPT in the UK is now the sixth highest in Europe, behind only Germany, Greece, Italy, the Netherlands and Finland. Prior to the Autumn Statement announcement, the UK had the eighth highest IPT standard rate in the EU, based on latest European insurance industry data, ABI research revealed, putting it in the top third. The UK also has a higher rate of 20% for travel, hire car and extended warranty insurance. The ABI said that further analysis of the Autumn Statement showed that IPT is now due to raise more than wine, spirits, beer and air passenger duty, with the total raised from IPT reaching £6 billion a year by 2018/19. hide Director General of the ABI, Huw Evans said: "UK consumers and businesses already pay relatively high levels of IPT, and the latest increase puts us even closer to the top of the table in Europe. It cannot be right that people are being forced to pay an increasingly high price for doing the responsible thing and buying insurance. Nor can it be fair that insurance customers are bearing the brunt of recent increases while the 'sin taxes' like wine, spirits and gambling are unaffected. Having now increased IPT three times in 18 months, it is time for Government to look elsewhere to help meet the formidable fiscal challenges it faces." IPT rates in Europe Finland 24% (Motor and Fire) Italy 21.5% (Liability, Fire, Theft, Other) 12.5% (Motor, Agricultural Liability and Fire) Netherlands 21% (Most - Marine, Travel, Health, Goods in Transit = Exempt) Germany 22% (Fire, Business Interruption) 19% (Home/Buildings, Livestock, Goods in German Transit, Other) Greece 20% (Fire, Motor Fire) 15% (Liability, Motor, Marine/Aviation, Health, Accident, Goods in Transit) UK 12% Most UK Risk 20% Travel, Hire Car Insurance, Extended Warranty Malta 11% (Most) Austria 11% (Most) Hungary 10% (except Motor at 30%) Belgium 9.25% France 9.0% (except Motor 33%; Fire 30%; Marine (Sport, Pleasure) 19%; Motor (Accidental Damage) 18%; Legal Protection 12.5% Portugal 9.0% (except Marine and Aviation, Goods in Transit, Agriculture, Personal Accident 5%) Slovenia 8.5% Slovakia 8.0% Spain 6.0% Croatia 5% (except Motor Liability 15%, Motor Damage 10%) Ireland 5% (Life 1%) Luxembourg 4.0% Romania 1% (Motor 2%) Bulgaria 2.0% Cyprus 1.5% Life (but 5% Motor (Guarantee Fund)) Denmark 1.5% (except Motor 42.9%) Sweden Exempt (but 32% For Motor) Poland Exempt (but 10% Fire Brigade Tax On Fire) Estonia No IPT Latvia No IPT Lithuania No IPT Czech Rep No IPT Non-Eu Liechtenstein 5.0% Norway No IPT Switzerland 5% (but Accident, Agricultural, Marine Exempt) Iceland 0.0045% Fees; 0.03% Prevention Tax (avalanches) Airmic expressed its disappointment, with Julia Graham, deputy CEO of Airmic, pointing out that the latest rise in IPT "is yet another increase in the overall cost of insurance, adding a further challenge for UK business and the insurance industry. As with the previous increase, the timing is especially difficult given that many companies will have already set their budgets for the next renewal season." Airmic said it believes the higher cost of insurance could also be counter-productive for the Government's policy of fighting cyber crime. "This increase comes at a time when businesses and the insurance industry are grasping cyber insurance covers more effectively, and it would be disappointing to see businesses deterred from taking on additional relevant covers by this increase. This scenario goes against other Government policies designed to encourage UK businesses to get cyber-fit," Ms Graham said. But there could be more bad news in the future. The Chancellor had said that IPT was half the rate of VAT. Mike Stalley, CEO of FiscalReps, said: "The increase in IPT follows a continuation of Government policy over the last few years suggesting a longer term trend towards standard rate parity with VAT, which is the case in a number of other European countries. We may see further incremental increases as the UK raises IPT closer to the standard rate of VAT."

UK Insurance Premium Tax increases again to 12%

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