ABI urges Chancellor to cut £7bn tax on insurance policies
The Association of British Insurers (ABI) has called on Chancellor Jeremy Hunt to cut the tax levied on insurance premiums.
The insurance industry’s trade body has made the plea once again as the Insurance Premium Tax (IPT) receipts hit record levels on the back of the soaring cost of cover.
A cut in next month’s Autumn Statement would help both businesses and households cope better with the cost of living crisis, the ABI said.
Total IPT receipts for the last complete financial year were £7.3bn, which was £714m higher than the previous financial year. The tax is charged at 12 per cent on mainstream insurance policies including household, motor, private medical and pet cover.
IPT receipts for this year have already totalled nearly £2.8bn in the first four months, a 27 per cent increase compared to the same period last year.
“Insurance Premium Tax penalises people for being responsible”, said the trade body.
“With businesses and households facing continuing difficulties with the cost of living crisis, now is the time for the government to relieve some of that pressure and consider cutting the tax”.
Car insurance premiums have hit record highs as insurers battle rising claims and heightened costs related to insuring electric vehicles, according to data compiled by WTW and Confused.com.
“Revenues from Insurance Premium Tax contributes over £6bn a year which goes towards vital public services, such as the NHS, social care and defence,” said a Tresury spokesperson in a statement sent to City PM