Biba is to lobby the government to bring the level of insurance premium tax (IPT) on travel policies in line with that on other insurance products.
Biba is to lobby the government to bring the level of insurance premium tax (IPT) on travel policies in line with that on other insurance products.
IPT on travel insurance is currently 17.5%, compared to 5% on other products.
Biba is preparing a consultation document in which it will outline reasons why IPT should be reduced to 5%.
Peter Staddon, head of technical services at Biba, said it was an anomalous stealth tax. He said that following the government’s decision to regulate travel agents it was “unsustainable” to have a differential level of tax for travel products.
“The Treasury has finally recognised that there is no rhyme or reason to have professional insurance personnel regulated, yet having non-professional insurance personnel exempt from regulated.
“This now means that there is, at least in some degree, a level playing field and, as such, the difference between the two levels of IPT is unsustainable going forward.”
The higher tax level is understood to have provided over £80m in addition tax revenues from 2005 to 2006.
The tax on travel insurance has been levied at 17.5% since 1997 as a “tax avoidance measure”, according to the Treasury. The higher level of tax was put in place due to the increase in reduced-price holidays.
