Chancellor would be wrong to increase 'tax on responsibility'


Embargoed until Wednesday 15th November at 00:01

Chancellor would be wrong to increase
 ‘tax on responsibility’

  • Insurance premium tax (IPT) has already doubled in two years, from 6 per cent to 12 per cent.
  • This cost will be paid by those consumers who are doing the responsible thingby buying insurance.
  • The chancellor is said to be considering a further rise in the upcoming budget.
  • IPT is also widely considered a stealth tax, with 72 per cent of Brits unaware that IPT has doubled within the past two years.
  • That increase is costing an extra £428 per household over 5 years, raising £11.6 billion over the course of the parliament.
The TaxPayers' Alliance today calls for the chancellor, Philip Hammond, to rule out any further increase in insurance premium tax. In the 2016 autumn statement, the chancellor hinted that insurance tax could ultimately end up on par with VAT (20 per cent).  If it does, then it would be one of the government’s top 10 tax revenues.

 John O'Connell, Chief Executive of the TaxPayers' Alliance, said:
"This tax had already been doubled in the past two years, a hike that will benefit the treasury's bean-counters but will hurt responsible consumers. It cannot be right to make it more expensive for taxpayers to do the right thing and buy insurance to protect themselves and their businesses. The Government should rule out any future increases and cut it instead."

A further IPT increase would act as a tax on responsibility, hurting those who do the right thing and buy insurance to protect themselves. It is a regressive tax that hurts those who need insurance the most and least able to afford an increase, like young drivers or small businesses at risk of flooding.

Imagine a young driver, dependant on a car to get to work, who is priced out of driving due to the ever-increasing cost of insurance tax. Do they quit work or drive uninsured? That is not a choice they should have to make. Rightly, 8 in 10 people (82%) are now concerned that increasing insurance tax will see more people drive without insurance*.

The Institute for Fiscal Studies has highlighted how increasing IPT to the same level as VAT would be damaging. They have suggested that a low single-digit rate would be more appropriate to consumers.
TPA spokesmen are available for live and pre-recorded broadcast interviews via 07795 084 113 (no texts)

Media contacts

James Price
Campaign Manager, TaxPayers' Alliance
24-hour media hotline: 07795 084 113 (no texts)

Notes to editors

1. Founded in 2004 by Matthew Elliott and Andrew Allum, and now with 80,000 supporters, the TaxPayers’ Alliance (TPA) fights to reform taxes, reduce spending and protect taxpayers. Find out more about the TaxPayers' Alliance at
* CONSUMER RESEARCH (Research conducted by Censuswide with 2,000 consumers, February 2017)
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