Increase in Insurance Premium Tax (IPT)
13 April 2017
In his Autumn Statement last year, the Chancellor, Philip Hammond, announced that insurance premium tax (IPT) will rise to 12% from June 2017. Since IPT was introduced in 1994 at 2.5%, it has been steadily increased by successive chancellors - however, this latest increase marks the third hike in just 19 months.
The tax, which is added to 50 million general insurance policies each year including those for cars, homes and private healthcare, has been described by the insurance industry as the UK's "fastest growing stealth tax".
With an ageing population and increasing levels of chronic illness, the challenges faced by an already stretched NHS is a growing concern. By increasing IPT and making health insurance more expensive, the government is effectively penalising those who are choosing to protect their health and pushing people back to the already overstretched NHS.
Furthermore, employers offering staff health insurance benefits will effectively be taxed twice. Rather than incentivising proactive employers, this tax increase will only make this type of employer support more costly to offer.
The Association of Medical Insurers and Intermediaries (AMII) believe the government should implement policies aimed at stimulating demand for private health insurance, such as the direct subsidy of insurance premiums, as well as tangibly encourage employers to assist their employees in taking responsibility for their health as an extension of their duty of care to staff.
As a result, AMII, as the voice of the health and wellbeing industry, has come together and begun a government petition to lobby for an IPT re-think.