After weeks of speculation, Chancellor Philip Hammond has now revealed his Autumn Budget 2018 - one which has been keenly anticipated by the insurance industry.
Chancellor Philip Hammond today announced that insurance premium tax (IPT) rates are to remain at the current level of 12% – welcome news for those in the industry who have been urging a freeze on the tax.
The decision has come following an open letter from four major private medical insurance (PMI) providers calling for the freeze, supported by Association of Medical Insurers and Intermediaries (AMII) executive chairman, Stuart Scullion. Other trade bodies and providers such as Aviva had also called on the government to freeze the IPT, calling it the “mother of all stealth taxes”.
IPT is a charge on general insurance premiums, including private medical and business, paid for by the consumer.
Figures from HM Revenue and Customs show the tax office raised a record £1.35bn in IPT in August, £200m more than in the same month last year and four times more than it predicts to raise from "sugar tax" in the whole year.
The tax has already increased on three occasions between November 2015 and June 2017 - doubling from 6 per cent to 12 per cent.
Allianz’s UK CEO Jon Dye said it was a “pleasing outcome” and Huw Evans, the CEO of the Association of British Insurers which has campaigned for an IPT freeze, was also encouraged by the news.
The AMII chairman would next like to see an IPT exemption for health insurance entirely.
"While we are relieved that Philip Hammond has observed the resistance from our industry to insurance premium tax, we are calling on the government to make healthcare spend exempt from this tax like other zero-rated insurance products such as life or critical illness," he said.
"IPT has a greater impact on people who have the most need to keep their health insurance, such as older individuals with riskier health profiles who pay higher premiums," he said, "These are the people being forced back into using NHS services as the cost of their PMI becomes unsustainable."