IPT to increase to 10% on Private Medical Insurance
IPT (insurance premium tax) will increase by 0.5% to a rate of 10%. In less than nine months this is the second increase to IPT.
In the 2015 Summer Budget Chancellor George Osborne announced the first increase. On 1st November the rate of IPT increased from 6% to 9.5%.
At the time the increase was explained as necessary to bring the UK in line with the rest of Europe.
Changes to IPT affected 3 million private medical insurance and cash plan policies but does not affect protection insurance.
It was estimated by the ABI (Association of British Insurers) that the increase on the1st November 2015 would likely add more than £40 to an average private medical insurance premium.
In August 2015, market healthcare experts LaingBuisson described the IPT increase to the declining private medical insurance market as being needed like a “hole in the head.”
AXA PPP previously described the increase as a “retrograde measure” to health and wellbeing.
In February 2016 insurer Medicash said the initial IPT increase put the UK insurance regime “at odds” with Europe.
The Government said the latest IPT increase will help fund new flood defences and maintain existing ones.
Steve White, Biba CEO, said: “Whilst we support the additional spending on flood defences we believe that this could have been funded by the projected £1.5 billion annual funds paid to the exchequer as a result in the increase in IPT put in place only last November, which puts an increased burden on policyholders, many of whom are suffering from ongoing flood damage.”