Millions of people and businesses across the UK now face higher insurance bills after the Government increased the rate of Insurance Premium Tax (IPT).
The latest IPT rate increase came into force from 1st June. The rate of tax paid on most insurance policies has now doubled over the past few years: increasing from 6% in 2015 to 12% in just 19 months. This will affect around 1.9m private medical insurance customers in the UK.
Affects all insurance providers
The Government first introduced IPT in 1994 at a rate of 2.5%, with the plan to boost tax revenue. Since it came into force, the rate has steadily increased. This latest increase will affect all insurance providers and add to the cost of policies. Overall, the new 12% rate could add an extra £283 a year to the average household’s annual insurance bill. The figures are brighter for the Government however, who will now receive £7 billion a year in IPT from insurance customers.
Impact on small businesses
Small businesses now face a substantial increase to their costs as a direct result of this increase. The Federation of Small Businesses say that the increase has already hit its members. Businesses say the increased rate drives up the cost of doing business at an already expensive time for them.
What do you need to do?
Is your Company Medical Insurance Policy due for renewal? If so, you will soon discover that your quotes for renewal premiums now also include a higher IPT rate. It’s worth taking the time to get a full market review comparison from one of our partners. This way, you can ensure you are getting the best deal for you and your business.