Insurance Made Easy
Nobody likes a smart a*** but, very occasionally, you get it right!
The Chancellor’s announcement in the Summer budget that Insurance Premium Tax (IPT) would rise from a standard 6% to 9.5% was described by insurance industry experts as a “shock”, “unexpected” and “unforeseen”. Maybe if they had taken the time to look at the appropriate item in our website Jargon Buster they might have been better informed. It was fairly obvious from pre-election promises that money would have to come from somewhere and IPT hadn’t been touched for years. OK, gloat over but we’ll leave the item as it is for a while longer if you don’t mind.
It really is difficult to justify this tax. Basically, it hits all individuals and businesses prudent enough to arrange insurance. The more insurance you have, the more you pay. Cut corners and underinsure putting yourself, family and employees at risk and you pay less.
Mr Osborne’s attempts to justify – a) only one in five insurance policies affected (love to see the stats on that one) and b) still much lower than in many European countries (true). All very positive then.
The change hits new policies from the 1st November and existing insurances from 1st March next year. IPT on travel insurances will remain at 20%. Expect a little more pressure on insurers to reduce basic rates to offset the tax increase.
Also expect (NB – a big hint to industry experts) further increases to follow. Why else would the Chancellor have introduced the unwieldy .5%?