You may not be aware but most insurance policies sold to people and businesses are subject to taxation by Her Majesty’s Revenues and Customs or HMRC. The tax was first applied back in 1994 and the current system has two rates, a standard rate, applying to most policies or a higher rate applying to specific types of insurance such as travel insurance.
The standard rate for most types of policy has been fairly slow to rise with the current rate being 6% for most Home, Motor and Commercial policies. This may not sound a lot but let’s assume that the premium charged by an insurer is £300, after adding on IPT the premium then becomes £318!
Unfortunately the standard rate is changing and we were disappointed to learn from the budget announcement earlier in 2015 that the Chancellor, George Osborne was going to increase this rate from 6% to 9.5%, quite a substantial increase! That £300 premium is now going to increase from £318 to £328.50! As the standard rate applies to most types of insurance it will increase the costs not just on one policy but for your Car Insurance, Home Insurance AND any Commercial policies you have – all within the same year. Now that change to the rate really does start to have an effect!
The taxation increase comes into effect on 1st November 2015 and applies to all new policies sold after this date and policies with their next renewal date after this date too.
The other thing to note is that this increase in IPT is in addition to any changes your insurer makes, for example by index linking your sums insured to keep pace with inflation or by increasing their own rates.
This change has the potential to dissuade people from buying insurance and doesn’t recognise the fundamental role that insurance plays in our economy – namely to provide protection and peace of mind and to support growth for businesses by providing cover against uncertainty.
It also means that where insurance is compulsory, for example motor insurance and where people feel they cannot buy a policy as they can’t afford the premium that we may see yet more uninsured drivers on our roads or more employers not buying Employers Liability Insurance.
Sadly we are all going to feel the effect of this change but help is at hand. An experienced insurance broker like Cascade can help by discussing your needs, checking that your policy will provide the cover you need and searching the market for a competitive premium. Don’t just rely on a comparison website or that policy you bought 10 years ago that renews and renews.
An experienced Insurance broker is in a much better position to provide practical advice based on knowledge, experience and qualifications gained within the industry. This means that you will get the right policy for you.
At Cascade we are qualified and a proud member of BIBA and all our advice and quotations are free and their is no obligation to purchase from us. We are experienced Kent based Insurance Brokers with access to a wide range of insurers and products.
Call us today on 01233 840505 and let us take the hassle out of insurance.
You can email the author, Mark Fisher using firstname.lastname@example.org