Huw Evans

The standard rate of IPT has doubled since 2015, most recently going up from 10% to 12% in June 2017. It applies to the vast majority of policies sold, including property, motor, health (including cash plans), pet and business insurance.

In 2017, research by the Social Market Foundation estimated that, if the standard rate of IPT had remained at 5%, its rate prior to 2011, then the savings per UK household could be significant. For the fiscal year, 2017/18, they estimated that households were directly paying about £50 per year more as a result of higher IPT.

If the business costs associated with higher IPT are ultimately borne by households (either through higher prices or lower incomes/dividends), then the additional cost per household could be as high as £105.

The following infographic reveals the impacts of the repeated rises since 2015 on some commonly held insurance products:

Total IPT revenue for government in the last five years has risen by 109%. In 2018/9 alone, IPT raised £6.19 billion, more than the taxes on wine, spirits or betting and gambling.

Huw Evans, director-general of the ABI, said: “IPT has doubled to 12% since 2015, and responsible people deserve a break. This tax hits people on lowest incomes the hardest, as it applies to products most people need or are required to have, such as home and motor insurance. Our rate of IPT is the 7th highest in Europe and hits our international competitiveness at a time when the UK needs to be making itself more globally attractive.”