IPT rate increases from 2011
by Gill Montia
Story link: IPT rate increases from 2011
In today’s emergency Budget, Chancellor of the Exchequer George Osborne announced that the higher rate of Insurance Premium Tax (IPT) will increase in line with VAT, from 17.5% to 20%, on 4th January 2011, while the standard rate will increase from 5% to 6%.
The hikes are expected to raise £0.5 billion a year for the Treasury by 2014-15.
The Association of British Insurers (ABI) has welcomed many of the Budget measures, particularly the Government’s commitment to make the UK the most competitive location in the G20 by the end of this Parliament.
It is also looking forward to working with the Government to develop a simpler tax allowance system for pension savers.
However, commenting on the increases in IPT, the Association’s director general, Kerrie Kelly, says: “Raising IPT is a direct tax increase for the vast majority of people who sensibly protect themselves and their families with insurance.”
Adding: “This is regrettable and could have serious unintended consequences if it puts off consumers from protecting their homes, cars, holidays and everyday living.”
For the average household, the ABI calculates that a 1% increase in IPT increases insurance costs by £7.99 per year, to £846.99.