The impact of Insurance Premium Tax on UK households

Insurance Premium Tax (IPT) – covering most general insurance – has increased substantially since its inception in 1994. In particular, since 2011 IPT has climbed rapidly as policymakers have sought additional revenue to reduce the deficit in the public finances. At present the standard rate of IPT stands at 12%, about five times its initial rate of 2.5%. IPT now raises more revenue than beer & cider duties, wine duties and spirits duties. It is set to raise more revenue than inheritance tax over the next three years, according to Office for Budget Responsibility projections. Since 1994 the standard rate of IPT has increased more rapidly than tobacco duty.

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