Biba calls on government to cut IPT rate in Autumn Budget

Biba has called on the UK government to cut the rate of insurance premium tax from 12% to 10% in the upcoming Autumn budget. 

The broker body also called for the government to exempt IPT on insurance for multioccupancy buildings requiring or undergoing inflammable cladding remediation,  for cyber insurance.

IPT is a tax on the price of an insurance product and functions as an indirect tax on consumers and businesses that is collected by insurers and paid to HMRC.

Biba also called for the creation of a services trade agreement with the European Union to “help ease” the shortage in supply of affordable home and motor insurance in Northern Ireland and called for the government to commit to a long-term plan for increased flood defence spending.

Biba chief executive Graeme Trudgill said: ”Our calls to the new government are based on supporting customers during the challenging economic times and ensuring that we have a strong broking sector to continue to advise and support businesses to manage risk effectively.

“The government has the opportunity to make some specific interventions to help ease the financial burden on customers and help with the issues that we are seeing with capacity in the Northern Ireland market. It could also provide incentives to address challenges in areas such as the increasing risk of cyber attacks.” 

IPT update

Earlier this year in March, Trudgill said that the government’s Spring budget was a “missed opportunity” to take action on the rate of IPT and other strategic issues. 

Since then, IPT receipts to His Majesty’s Revenue and Customs (HMRC), published on 21 August 2024, have shown that revenues topped £3bn for the first four months of the 2024/25 financial year.

In the data, HMRC showed that IPT receipts for the period April to July 2024 reached £3.07bn – a rise of 11% from the same period last year, when receipts reached £2.76bn.

When IPT figures for the 2023/24 financial year were released back in April this year, actuarial consultancy OAC told Insurance Times that the full year figure represented a “record breaking” amount.

Figures for this year are already suggesting that this record will be broken again in 2024/25.

Cara Spinks, head of insurance consulting at OAC, commented: ”IPT continues to deliver substantial receipts for the Treasury, as premium inflation continues to impact a multitude of sectors and products. 

“The chancellor’s desire to find alternative revenue streams to reduce the size of the UK’s fiscal ‘black hole’ suggests a reduction in IPT is unlikely at the Autumn budget. However, given this administration’s focus on growth, it is an area we would encourage them to scrutinise carefully.”