BUDGET: Increases to insurance premium tax
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The standard rate and higher rate of insurance premium tax is to rise next year.
In line with the main rate of VAT increasing from 17.5 per cent to 20 per cent next year, the higher rate of insurance premium tax will also rise from 17.5 per cent to 20 per cent.
The standard rate will increase from 5 per cent to 6 per cent.
British Insurance Brokers’ Association chief executive Eric Galbraith says: “This is a tax on protection. We are concerned that increases to insurance premiums as a result of insurance premium tax could lead to even further underinsurance or even a lack of insurance protection. The last thing people need in a financial crisis is a higher insurance bill.”
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Readers' comments (3)
Steve Laird | 22 Jun 2010 2:50 pm
Come on Eric. Let's have a sense of proportion here. This is going to add 1% to the cost of a policy. Is that really a big deal?
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Steve Devine | 23 Jun 2010 8:10 am
I agree with Eric. The reduction of consumer's disposable income is not good news for insurance. Rising insurance premium costs will just add to the problem. Markets such as individual Income protection, are vunerable enough already. We should be incentivising people to protect themselves.
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M J Winfield | 23 Jun 2010 10:36 am
There appears little justification for not having Insurance Premium Tax equal to Standard Vat Rate.
The attack on Net Spendable Income would happen anyway so why should this industries contribution be passed on to others.
Surely the answer is for the product providers to absorb and negate the effect of any tax increase. I reflect that the budget is industry friendly, so spare some cream for others.
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