IPT rakes in record £1.35bn for Government
Industry urges no more increases to the 'mother of all stealth taxes'
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The Government is being urged to freeze Insurance Premium Tax (IPT) at the forthcoming Budget, after HMRC figures revealed that taxpayers are now paying record amounts of the tax.
Official tax receipts for August show IPT raised a massive £1.35bn for HMRC in a single month – the highest amount ever and £200m more than it raised in August 2017. This is more than four times higher than the so-called sugar tax is expected to raise in a whole year (£300m).
Further calculations show that the tax take from IPT for the last 12 months has now hit £6.13bn, more than that brought in by sin taxes on beer, wine or gambling in the same period. The Treasury predicted revenues of £6bn from IPT for the financial year 2018/19, so these new figures suggest that taxpayers are paying even more than expected.
The standard rate of IPT has been increased three times since 2015, last going up from 10% to 12% in June 2017. It applies to the vast majority of policies sold, including property, motor, health, pet and business insurance.
IPT is the mother of all stealth taxes because:
• Around half the population (48%) is unaware of its existence – much lower than many other similar taxes
• It's levied on products regarded as either completely or mostly essential by 58% of people
• It raises more money for Government than sin taxes on beer, wine or gambling
• It's set to cost every UK household £200 this year, given the knock-on effect on costs charged by a range of businesses
• The UK has the 6th highest rate in Europe
Huw Evans, director general of the ABI, said, 'Insurance Premium Tax is the mother of all stealth taxes. Despite insurance customers paying more and more of it, many people still remain unaware of it. Insurance customers are responsible people, abiding by the law and taking sensible steps to protect themselves, yet this responsible behaviour has been punished by repeated rises in IPT. The Chancellor should look elsewhere in his efforts to balance the books.'
Based on the Government's Tax and NIC receipts statistics table, this is how much money HMRC has received from the following taxes and duties in the 12 months between October 2017 and September 2018 inclusive:
• Insurance Premium Tax - £6.13bn
• Beer duties - £3.60bn
• Wine duties - £4.37bn
• Betting and gaming - £2.97bn
The ABI's digital campaign, #IPTsUnfair, has been viewed by nearly two million people on Facebook. It urges the Government to end its raid on the responsible by ruling out further rises in IPT. See the film here.