Research from the Association of British Insurers highlights a widespread lack of awareness of Insurance Premium Tax (IPT), despite it impacting 84% of UK households, making it the nation’s “hidden in plain sight” tax.1
IPT applies to most general insurance policies including motor, home, pet, and private medical insurance. The standard rate has doubled to 12% since October 2015. It is likely to hit the poorest the hardest who spend proportionately more on insurance, such as home and motor.
To power its campaign calling for a cut in IPT to help hard pressed households and businesses, the ABI has created a mascot, named Snippy.
Created by the costume production team behind the hit ITV show ‘The Masked Singer’, Snippy is a human-sized pair of scissors billed as helping to ‘unmask’ IPT as a tax that punishes responsible choices.
The campaign also highlights new research that shows most people have little or no knowledge of the tax.
Research commissioned by the ABI and conducted by OnePoll among 2,000 insurance customers highlights that:
Over two thirds of people (67%) admit that they either have little or no knowledge of IPT.
50% of people said that they had little or no idea of the impact that IPT had on their insurance costs. This despite the fact that this tax now adds an extra £67 to the cost of the average price paid for motor insurance.
Some insurance customers are slimming down their cover, with one in five (21%) removing additional extras they had previously included.
IPT earning similar to ‘sin taxes’ of alcohol, cigarettes and gambling.
It is estimated that IPT receipts will surpass £8bn this tax year, with current receipts up 10% vs the previous financial year. So far (to end Jan 2024) IPT has brought in £6.7bn, compared to beer (£3.1bn), spirits (£3.7bn), tobacco (£7.3bn) and gambling (£2.3bn).2
Mervyn Skeet, Director of General Insurance Policy said: “It is high time we unmask this tax which penalises people and businesses for being responsible.
“This tax hits the poorest hardest because they typically spend more on insurance, such as home and motor cover, as a proportion of their income.
“There has never been a better time for the government to show its support to the millions of homeowners and businesses who do the right thing by buying insurance. We should cut IPT now.”
|
