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Insurance Premium Tax on the rise

As announced in the 2016 Autumn Statement and confirmed in the 2017 Spring Budget, the standard rate of Insurance Premium Tax (IPT) is set to rise from 10% to 12% with effect from 1 June 2017.

The latest increase means that the rate of IPT will have doubled in just over 18 months. IPT rose from 6% to 9.5% in November 2015, and then again by a further 0.5% to reach 10% in October 2016.

The Association of British Insurers (ABI) previously warned that many insurers may pass on the additional tax burden to their customers in the form of higher premiums, rather than bear the extra cost themselves.

It calculated that the rises in both 2015 and 2016 could have added more than £100 to the annual insurance costs of a typical family.