Petition urges government to exempt charities from insurance premium tax

IPT is due to increase to 12 per cent in June, having stood at 6 per cent in late 2015

Westminster: government raising IPT
Westminster: government raising IPT

A petition calling on the government to grant an exemption for charities from the planned rise in insurance premium tax has been posted on the government’s petitions website.

The petition, which calls for charities to be given an exemption from or a reduction of insurance premium tax rates, has been started because the rate of IPT is due to go up to 12 per cent in June, doubling in only 18 months.

IPT is a tax on general insurance premiums, such as home, car and travel insurance, and many charities, especially those with property, are affected.

The petition, which is part of a wider campaign launched this week to reduce the IPT burden on charities, comes after an announcement at last year’s Autumn Statement that the IPT would increase from 10 per cent to 12 per cent from 1 June.

This means the IPT rate will have doubled in 18 months. It increased from 6 per cent to 9.5 per cent on 1 November 2015 and to 10 per cent on 1 October 2016.

The petition, which was created before Christmas but is being promoted as part of the campaign, runs until 21 June and had attracted more than 500 signatures at midday today.

It says the government should be supporting the work of charities, "not imposing unnecessary costs on them".

It says: "These increases have and will continue to negatively affect charities who have already suffered in the last few years from reduced income while seeing an increase in the demand for their services."

Simon Hickman, chief executive of the insurance firm Access Insurance and author of the petition, said that for many charities the increase in IPT would have a "significant impact" and there were concerns in the insurance sector that IPT could be brought in line with VAT at 20 per cent.

He said: "It is disappointing to see the government take aim at organisations and individuals who have a responsible attitude to risk and who have chosen to pay to protect their assets and liabilities. This is not a tax on insurers but a tax on policyholders."

Hickman said he had been working with the Charity Finance Group to raise the issue with the Treasury and arrange a ministerial meeting.

Andrew O’Brien, head of policy and engagement at the CFG, said: "The IPT hike is another additional cost for charities, which are already having to grapple with the increased costs caused by the national living wage and auto-enrolment while funding remains flat.

"This hike is going to affect all charities, big and small, and the government did not consider the impact on charities before it made the announcement."

John Hemming, chairman of the Charity Tax Group, which is also campaigning on IPT, said there was a "very strong case for relief where insurance is a necessary and responsible requirement as part core charitable activities".

He said: "This government revenue raiser has a disproportionate impact on charities, especially those with large portfolios of operational buildings and extensive transport and travel commitments. We have serious concerns about rumours that IPT might eventually be increased to 20 per cent, in line with VAT."

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