Insurance premium tax up by 22% in 2018

Insurance premium tax up by 22% in 2018

The Government makes £6bn from Insurance Premium Tax in 2017/18

Insurance premium tax up by 22% in 2018

The Treasury has been benefiting from the growing need for a wider range of insurance, as recent tax increases have generated another £808m, according to UHY Hacker Young. This is 19% more than the government initially forecast.

UHY Hacker Young stated: “The government’s income from Insurance Premium Tax increased to £6bn in 2017/18, up 22% on £4.88bn collected the previous year – a far bigger impact on businesses and consumers than had been predicted by the government.”

It is undeniable that, over recent years, it has become pivotal for businesses to make sure they are protected against cyber-attacks.

The government further increased the Insurance Premium Tax (IPT) from 10 to 12% in June 2017, following on from their announcement in the 2016 Autumn Budget. IPT has risen by a total of 55% since the value of £3.8bn in 2015.

The firm went on to add: “The government forecast that the Insurance Premium Tax (IPT) increase would generate an extra £680m in tax raised. However, the added tax raised from businesses and consumers was £808m last year – 19% more than the original prediction.”

The need to take out extra insurance policies, combined with the IPT increase, has led to businesses being doubly affected. The likes of employees’ liability insurance are compulsory for any company, but ever-evolving technology means that there are constant new threats businesses need to protect themselves against.

According to UHY Hacker Young, there were around 1.7m cyber-crimes in the UK in 2017, but only 47 prosecutions related to computer hacking in the same year.

As the government has so far been unable to tackle the growing problem of cyber-crimes, businesses have no choice but to protect themselves through increasing levels of insurance.

Recent research has concluded that nine out of ten businesses in the UK have some form of cyber insurance.

Richard Lloyd-Warne, partner at UHY Hacker Young, stated: “The Treasury is benefiting from the necessity of insurance by more than they had originally expected.

“The fact is that businesses are now facing more threats than ever, all of which must be insured against. Just as the risk of a cyber-attack has ballooned over the last few years, new threats are likely to spring up in the future.

“There are also a range of other insurance policies that many businesses are forced to buy, such as employees’ liability insurance and professional indemnity.

“The government, however, could choose to concentrate taxation on areas that they want to discourage, rather than taxing something that businesses have little choice to do.”

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