Budget 2016: Insurance tax rise to fund flood defences
Insurance Premium Tax will rise from 9.5% to 10% from 1 October 2016, Chancellor George Osborne announced today.
The increase is to fund investment in flood defence and resilience measures. It last rose on 1 November 2015 when it increased from 6%.
But while IPT is a tax on insurers, it’s typically passed on to consumers. The Government says if this 0.5% increase is passed on, the average combined home and contents insurance policy would increase by £1, while the average motor insurance premium would rise by £2 per year.
Steve White, CEO of the British Insurance Brokers’ Association (BIBA) CEO says: “Let’s be clear about this, IPT is a tax collected and remitted by insurers, it is a tax on premiums paid by policyholders – motorists, householders, and businesses large and small.
“Whilst we support the additional spending on flood defences we believe that this could have been funded by the projected £1.5bn 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.”
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Does exactly what it says on the tin: covers the contents of your home for theft and damage and also may insure certain possessions (jewellery, cycles) outside of the home. Things to watch for include the excess and also the maximum payout on individual items. Another grey area is kitchen fittings, as some contents policies say these are not contents but part of the fabric of the property and covered by buildings insurance and some buildings policies don’t cover them because they regard them as contents.