The new chancellor Phillip Hammond has announced a rise in insurance premium tax from 10% to 12% and this will take effect from June 2017.
This is the third increase to the rate of IPT in less than 2 years and affects general insurance policies including private medical insurance. Travel Insurance IPT will remain at 20%.
It is worth noting that insurance premium tax in the UK is still lower than many other European countries and half the rate of VAT so expect further increases in the future as the Government clearly see IPT as a significant revenue generator for them going forward.
Our view is that increased IPT is bad for the UK economy as increased tax can result in some individuals or companies being tempted to under-insure or even non-insure.