Anti-avoidance measure will hurt broker fees too
The British Insurance Brokers’ Association (BIBA) has reacted to changes to to insurance premium tax (IPT) revealed by Insurance Times this morning.
IPT has to be applied to fees charged under a separate contract in connection with personal lines insurance. The Chancellor brought in the anti-avoidance measure to close the loophole following the HomeServe case.
Eric Galbraith, BIBA chief executive, said: “The process of closing this loophole has brought all fees charged into scope. This is not only a further cost to consumers but a huge cost to many members in its collection and we are very concerned.
No pre-warning
“This measure takes effect from yesterday and has been brought in without any pre-warning or discussion with the industry. Expecting brokers to change processes and systems without allowing any timescale to introduce these is absurd.
“Frankly, I do not believe that applying IPT to administration fees charged by brokers completely separate from the insurance policy, where IPT already applies, was intended when trying to close the HomeServe loophole. This is taking a large hammer to crack a small nut.
“There are a number of questions that need to be addressed and we will be working on behalf of members to answer these and inform members.”
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