Adrian Smith, Global Head of Insurance Premium Tax, KPMG and Michelle Quest, Head of Tax at KPMG in the UK, comment on the decision to again raise the rate of insurance premium tax.
Adrian Smith, Global Head of Insurance Premium Tax, KPMG, comments on the decision to again raise the rate of insurance premium tax:
“We have now seen the rate of insurance premium tax (IPT) double in under two years.
“The rise is not wholly unexpected as HM Treasury has handed the sector an olive branch with its proposals to reduce whiplash claims which weigh so heavily on the industry. However, such a dramatic increase in tax will inevitably result in a premium increase causing concern about the potential unintended consequences on insurance renewals, especially for those legally essential policies.
“At a time of such economic and political instability this will be yet another challenge for UK insurers.”
Michelle Quest, Head of Tax at KPMG in the UK, said:
“In a hugely uncertain environment, the Chancellor has clearly endeavoured to provide some certainty and stability. ‘Steady as she goes’ seems to be the message Philip Hammond was giving when he stood up in the Commons today: committing to the business tax roadmap announced at the March Budget, business rate reform, and maintaining the ambition of reducing headline corporation tax rate to 17% by 2020.
“The most significant tax change the Chancellor revealed today was the rise in Insurance Premium Tax (IPT). While the Chancellor made no direct link, looking at numbers, it would appear as if the rise in IPT is funding the fuel duty freeze. In any case, this is the single largest tax increase announced and there were also hints we could see further increases in future years.”
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