Insurance Premium Tax (IPT) was originally introduced in the 1993 budget by another Conservative Chancellor of the Exchequer, Ken Clarke, at a rate of 2.5%. Insurance premiums have always been VAT exempt – the principle behind this being that any extra cost to insurance was seen as a disincentive for people to insure and would result in governments footing the bill for non-insurance. Following Chancellors very quickly realised that IPT like VAT is a very cheap tax to collect as unlike income tax someone else does the collection and accounts to the Treasury for the whole amount.
Castleacre Director, Hugo Johnsen, said:”This is the 4th time since 1993 that IPT has been increased and rather like Dracula our Chancellors have now developed a taste for it so beware – I wouldn’t be surprised to see it equal the VAT rate one day!’
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