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We are used to most tax changes being made from April each year but one tax - Insurance Premium Tax (IPT) – is an exception. The standard rate of IPT is to rise from 10% to 12% with effect from 1 June 2017. The latest increase will mean that the rate of IPT will have doubled in just over 18 months. It was only 6% in October 2015.
The additional revenues the increase will provide to the government are significant. Estimated additional annual receipts for 2018/19 and future years are £840 million. Total annual receipts are expected to rise to £6 billion in 2018/19. In 2013/14, total receipts were £3 billion. The rising importance of IPT is also illustrated by the estimates of receipts from other taxes. In 2018/19 estimated receipts from capital gains tax are £10 billion and inheritance tax is expected to raise £5.2 billion.
The Association of British Insurers has calculated that the previous rises in 2015 and 2016 could have added £45 to the annual insurance costs of a typical family with two cars, and combined contents and building cover.
More rises are on their way.
Why not contact Wilkes Tranter & Co Limited today for more information or a FREE no obligation quote.
Government borrowing fell to £7.8 billion in December 2023 giving Chancellor Jeremy Hunt more scope to make the tax cuts he has hinted at in the Spring Budget.
Tax cut promises may need to be scrapped as a result of the UK being in an 'unfortunate economic and fiscal bind', the Institute for Fiscal Studies (IFS) has warned.
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