Millions are paying more as the rate of IPT increased from 10% to 12% from the 1st of July.
This latest increase means the rate of tax paid on most insurance policies has doubled from 6% in 2015 to 12% currently. This tax produces over £7bn p.a for the Government and the Chancellor has indicated that more increases are possible.
The increase affects not only business owners but also home owners, renters with contents cover, motorists, homeowners with mortgage protection, people with private medical insurance and people with pet insurance.
Because of the way the tax is applied those that pay more for their insurance face the heaviest burden, for example a business located in a higher rated postcode area.
Unlike VAT, businesses cannot claim back the cost of IPT. As premiums rise, it is vitally important that businesses, in order to compensate, do not reduce the level of cover needed, as this can lead to problems in the event of a claim.