Expectations mount for future insurance premium tax hikes

Expectations mount for future insurance premium tax hikes

An IFA has expressed concern the chancellor may increase the insurance premium tax again in the future.

Kevin Hever, financial adviser with Wolverhampton-based Cornerstone Financial, said today’s 0.5 per cent increase, which now takes the insurance premium tax to 10 per cent, said: “It doesn’t sound like it is going to make a huge difference to people but you worry it is something he may return to in the future.”

Overall, however, advisers have expressed relief at the slight increase.

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Mike Horseman, managing director at Cockburn Lucas Independent Financial Consulting, said: “He’s got to get some money coming in. With the 0.5 per cent it is unsure how many billions that will bring in but it’s a neat way of raising some more cash and it is not exactly controversial.

“A lot of people won’t get that it has gone up. Overall today’s (16 March) Budget has been a good day for us planners.”

William Hunter, director at Hunter Wealth Management, said: “Everyone pays it without choice. There’s nothing you can do to avoid it but in the circumstances it’s a very small increase so I don’t think people will notice.”

Garry Filby, financial adviser at Reading-based Financial Aspects, said: “It’s not much. Not as large as I expected.”

In July 2015, Mr Osborne announced an increase in the tax - from 6 per cent to 9.5 per cent, which took effect in November.

Among other things, insurance premium tax is charged on medical insurance.

There had been speculation ahead of the Budget of an increase of up to 12.5 per cent, meaning this was a smaller blow than might have been expected but the increase will directly affect the cost of insurance.