The Association of British Insurers has asked the government to cut the rate of insurance premium tax in its forthcoming budget on 11th March.The government raised £560m from the tax in December 2019, up 10% on the previous December, according to ONS data published in January 2020.

The standard rate of IPT has doubled since 2015, most recently going up from 10% to 12% in June 2017. It applies to most policies sold, including property, motor, health, pet and business insurance.

The ABI stated that, based on the same ONS data, total IPT revenues for government have soared by 98% between 2015 and 2019. In 2018/9 alone, the tax raised £6.3bn, compared with the income from taxes on beer (£3.6bn), wine (£4.3bn), spirits (£3.7bn) or betting and gambling (£2.3bn).

Director-general of the ABI, Huw Evans said: “Hard working and responsible families and businesses deserve a break from the IPT burden which pushes up the cost of insurance without people noticing.

“This tax hits the poorest the hardest on products that most people need like motor or home insurance,” he added. “It also penalises people for doing the right thing and saving the state money, while taxes on alcohol and gambling have stayed low.”

Evans further highlighted that the Treasury’s rate of IPT is the sixth highest in Europe and hits the UK’s international competitiveness at a time when it needs to be making itself more globally attractive.

The ABI issued a similar request to the government in October.

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