Small businesses fear IPT budget hike - #IPTsUnfair
Posted on: 04 October 2018
Ahead of the Budget on 29th October, independent research commissioned by Allianz* has revealed anxiety amongst SME business leaders that the Chancellor will increase Insurance Premium Tax (IPT) from its current standard rate of 12%.
85% of the 250 SMEs that took part in the research said they were concerned about the financial impact on their businesses if there is another rise in the rate of IPT.
The standard rate of IPT increased three times between November 2015 and June 2017 – rising from 6% to 12% and the fear is the rate could keep on rising. Higher rates of IPT are already imposed in other EU countries such as Finland (24%), Netherlands (21%) and Germany (19%) so the Chancellor does not need to look far for precedents to support an increase.
Dave Martin, Allianz’s director of SME and Corporate Partnerships said:
At a time of significant uncertainty for SMEs about what the future holds post Brexit, we are calling on the Chancellor not to increase the tax burden on businesses by increasing Insurance Premium Tax.”
The survey also showed the unpopularity of the tax because of its underlying unfairness. 76% of SMEs agree IPT is a tax on prudent businesses that take out insurance to protect their property and people.
The suggestion that IPT is also something of a stealth tax is supported by the research finding that nearly 1 in 3 small businesses did not know they are paying it.
Dave Martin added:
We hope our broker partners will flag up to SMEs the level of IPT in the overall cost of their insurance and the unwanted role of tax collector the industry plays on behalf of the government.”
Explaining what prompted Allianz to commission the survey, Dave Martin said:
As a leading provider of SME insurance it’s important we understand the demands our customers face and show we are in a partnership with them. IPT is clearly a significant financial burden on businesses and we want to show we’re trying to do something about it.”