Chances are, you’ve never heard of a little thing called IPT (Insurance Premium Tax), but if you’ve ever looked into why your insurance is the price it is, you may well have come across it. Putting it bluntly, IPT is the VAT of the insurance world, and increases are why insurance premiums are rising for everyone.
IPT was introduced by Conservative Chancellor Kenneth Clarke in 1993, previous to this there was no tax imposed on insurance, because it was seen as a social good - as it continues to be. From 2007 to 2011, there were only two increases in IPT. The first of which at the hands of Gordon Brown, increasing the tax from 4% to 5% and then under George Osborne, which saw it increase to 6%.
However, in a period of 20 months up to the 2017 Spring budget, we saw IPT sit at a whopping 12% at the end of three separate increases, and that’s only on the standard rate. The higher rate, which covers Travel Insurance, Appliance Insurance and some vehicles, is even higher at 20%.
After this speight of rises, following the Spring 2017 budget, the Financial Secretary wrote to the Treasury stating that there was no evidence that there was a definite increase in uninsured driving. However, a study made in August 2017 by the Motors Insurers Bureau (MIB), who are a specialist body dealing with uninsured driving, showcasing that there was a significant increase in the number of claims following accidents with uninsured drivers for the first time in over a decade, which was up by 10%.
Not only do IPT increases mean that insured, safe motorists pay for the mistakes of uninsured drivers, but it means that more uninsured drivers could be taking to the roads due to the out-pricing of motorists.
For insurers and brokers like us, we don’t want the price of your peace of mind to increase, and we especially don’t want anyone to consider driving without insurance because they can’t afford it.
So before the Autumn budget, if you like us feel that these rampant IPT increases are causing more ill than solving the current issues, then we encourage to write to your MP using these templates to express your concern, and to prevent IPT from rising further.