As far as the British Insurance Brokers’ Association (BIBA) is concerned, the Insurance Premium Tax (IPT) is a tax on protection which impacts insurance uptake. Now if you’re wondering just how much IPT went to government coffers for year 2017/2018 ending July 31, well, we have the low-down.
A whopping £5.94 billion – a 22% rise year-on-year – in IPT was collected, according to data reported by national accountancy group UHY Hacker Young. Citing the government’s forecast, the firm said the additional income raised from last year’s IPT adjustment is much more than initially predicted.
UHY Hacker Young noted that the extra tax generated from the IPT rate hike – from 10% to 12% in June 2017 – amounted to £808 million for the year ending March 31. This is 19% higher than the government’s projection of £680 million.
“The Treasury is benefitting from the necessity of insurance by more than they had originally expected,” commented UHY Hacker Young partner Richard Lloyd-Warne. “The fact is that businesses are now facing more threats than ever, all of which must be insured against.
“Just as the risk of a cyberattack has ballooned over the last few years, new threats are likely to spring up in the future. There are also a range of other insurance policies that many businesses are forced to buy such as employees’ liability insurance and professional indemnity.”
In Lloyd-Warne’s view, while businesses face risks they have little choice but to purchase cover for, the government could choose to concentrate taxation on areas that they want to discourage instead of taxing insurance.
The income raised from IPT for the 2015/2016 July 31 period was only £3.8 billion, according to UHY Hacker Young, which means the amount has climbed 55% in two years.
