The Association of British Insurers has asked the government to cut the rate of insurance premium tax in its forthcoming budget, due on 6th November.

The IPT standard rate has doubled since 2015, most recently going up from 10% to 12% in June 2017. The current IPT rate adds £50 to a private car comprehensive policy, up to £34 for property insurance and £167 for private medical insurance, according to the ABI.

Consumers would save £25, £17 and £85 respectively on those premiums, if the IPT rate was reduced to 6%.

The tax applies to most policies sold, including property, motor, health, pet and business insurance. According to HMRC, resulting revenue for the government in the last five years has risen by 109%. In the fiscal year 2018/19 alone, IPT raised £6.19bn, more than the taxes on wine, spirits or betting and gambling.

Director-general of the ABI, Huw Evans said: “This tax hits people on lowest incomes the hardest, as it applies to products most people need, or are required to have, such as home and motor insurance.

“Our rate of IPT is the seventh highest in Europe and hits our international competitiveness at a time when the UK needs to be making itself more globally attractive,” he added.

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