The recent budget delivered a blow to insurance customers with the announcement that insurance premium tax is set to rise later this year. Nigel Cooper, Aon’s National Public Sector Practice Leader, looks at how this affects public sector organisations.
In the Budget announced on 8 July, the UK Chancellor of the Exchequer, George Osborne, announced that the standard rate of Insurance Premium Tax (IPT), which is applicable to most general insurance including property, motor and medical insurance, will increase from 6% to 9.5% with effect from 1 November 2015.
Although an increase in IPT wasn’t a surprise, the scale of the rise – a 58% increase in the tax – was much steeper than had been expected. As a result it will be important for public sector organisations to understand not only when it will apply, but also the steps they can take to reduce the effect of the increase.