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Warning over insurance tax rise for small firms

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FSB has urged the new Government to rule out any further rises in insurance premium tax (IPT) over the next Parliament. 

The rate of IPT rose to 12 per cent in June, and there are fears this could be a target for further increases. 

Mike Cherry, FSB National Chairman, said: “The doubling of IPT over the past five years is hitting our members, directly increasing insurance costs at a time when the costs of doing business are at their highest since summer 2013.

“Having absorbed a recent rise in the National Living Wage and a business rates revaluation, there will no doubt be many small firms thinking twice about taking insurance policies as a result of this tax grab. If insurance premiums continue to increase, small business take-up of insurance will dip, and it will be those most at risk that will be affected.”

IPT applies to all insurance policies, including income protection, vehicle and flood. 
Mr Cherry added: “This poorly thought-through tax rise discourages good behaviour and is yet another hidden cost keeping our entrepreneurs awake at night.”