After a rise from 6% to 9.5% 5 months ago, Insurance Premium Tax saw another rise to 10% in this week’s budget. Although this rise in tax on general insurance premiums is lower than the 12% predicted in pre-budget speculation, it is still a blow to businesses. In recent years, insurance premium costs have been decreasing, but studies showed an increase last year. With further rises now expected, many have labeled the rise in IPT a ‘stealth tax’.
How will you be impacted by these changes?
1) Businesses will suffer.
Higher insurance premiums mean that businesses will have higher operating costs, which may result in lower profits or a rise in charges for their services or products. Alternatively, some businesses may feel financial pressure to cut back on their insurance cover, placing them at an increased risk and precariously exposed to dangers such as fire, flood and theft.
2) Consumers will suffer.
Experts calculated that last year’s rise added £100 to the average family’s insurance bill. This further rise is an additional burden to responsible consumers.
Osborne proposes to use the £700 million produced to boost our resilience and flood defences. We hope that this money is well-managed and has a strong and positive impact in protecting homes and businesses. At a time where financial security is particularly precarious for many households and businesses, any further increases to IPT are of great concern, as they impose greater financial burdens or threaten to impact the levels of cover and protection arranged for when things go awry.
If you have any questions or concerns, you are welcome to call us on 0191 438 79 77 for further information or advice.