The Chancellor of the Exchequer has called for evidence on where improvements can be made to the controversial insurance premium tax.
Philip Hammond made the announcement in yesterday’s Spring Statement, stating the review would be to ensure the tax operates "fairly and efficiently".
IPT is a charge on general insurance premiums, including private medical and business, with critics long referring to it as a "stealth tax".
Over the past few Budgets, in November 2015 and June 2017, Mr Hammond had increased IPT from 6 per cent to 12 per cent.
But in the most recent Budget Mr Hammond chose not to increase IPT, a relief to those in the industry who had campaigned for the tax to be spared any further rises.
In October the Association of British Insurers launched its #IPTsUnfair campaign, intended to highlight the "absurdity of punishing people who are doing the right thing".
The trade body previously reported calculations from the Centre for Economic and Business Research showed 200,000 people had moved away from health insurance towards NHS care because of recent IPT rises.
Elliott Silk, head of commercial at Sanlam UK, said: "Governments have traditionally seen raising the IPT as a quick way to increase revenues without murmurings from the general public – a classic stealth tax.
"However, IPT affects certain insurances that are mandatory. If companies increase excesses in response to this tax rise, it directly impacts consumers."
Mr Silk said he welcomes the Chancellor’s latest review and hopes it is the first step to delivering a "fairer playing field".
He added: "But more clarity is needed on whether this operational review is with a view to bringing IPT into line with taxes such as VAT or if the government is looking to change the items on which IPT is applied. As ever, the devil is in the detail."
rachel.addison@ft.com
