ABI criticises ‘raid on the responsible’ as IPT rises to 10%
The standard rate of IPT, which applies to most general insurance policies purchased in the UK, is going up to 10% after being increased by the previous Chancellor George Osborne in the Budget in March this year.
Huw Evans director general of the Association of British Insurers (ABI) described the two IPT increases as a “raid on the responsible.”
The new rate is likely to add over £52.50 to the average private medical insurance policy compared with this time 12 months ago (taking the impact of both increases into account).
Considering only the latest 0.5% rise, that is likely to add an extra £6.50 each month to the average private medical insurance policy from tomorrow compared with the previous month.
Because IPT is a tax the Government applies to individual policies, people who have the highest insurance costs – such as those with on-going medical conditions – attract the highest amounts of tax.
Life insurance is exempt from IPT, as are a few other specific insurance lines such as insurance for spacecraft and commercial ships and aircraft.
AMII has said that private medical insurance should be exempt from the latest rise and is lobbying the government to action this.
LaingBuisson previously described the PMI industry as needing the first PMI rise like ‘a hole in the head.’
The ABI’s Evans said: “Insuring your home or business, your health and your possessions is the wise thing to do, taking responsibility for protecting yourself from some of the unexpected events in life. Insuring your car is a legal requirement.
“These two IPT increases are a raid on the responsible, taking advantage of those who already do the most to avoid becoming a burden on the state.
“The government should be in no doubt that such steep increases in insurance premium tax may eat into the finances of both households and businesses. Any further hikes would be indefensible.”
Alex Perry, General Manager, Bupa UK said:”Health insurance customers are the ones who suffer the most from this unfair tax.
“The second rise in less than a year now makes IPT the biggest inflationary factor in people’s premiums.
“We believe Health Insurance should be zero-rated like it is in many other countries, and like Life or Critical Illness insurance in the UK.
“Our customers are being punished, being taxed for choosing to pay for a service that’s effectively reducing the burden on an increasingly strained NHS.”