UK Budget – If thats Radical I’m Obama’s Change

Well we’re pretty disappointed here at Insurance Blog in Mr Brown’s, sorry Mr Darling’s ‘Emergency Budget’ efforts yesterday. The £2.50 change to VAT is really going to get noticed in a market where January Sales started in November.
Balancing the so called give-aways against threats to tax the not-so-very-rich rich, is hardly helpful or forwardlooking.
Now radical would be raising the 40% tax limit from £38,000 to £60000 and maybe, reducing the rates and doubling the limits of Stamp Duty – helping to stimulate the housing market bottlenecks created by the middle classes where most of the debt and strangled liquidity lies!
Oh yeah stop wasting money on stupid wars might help the Balance of Payments just a little bit maybe!!

Anyhow did anyone notice if there were any changes to the levels of Insurance Premium Tax?

IPT is the tax on premiums received under taxable insurance contracts.
Currently there are two rates:
• a standard rate of 5 per cent
• a higher rate of 17.5 per cent (

All Insurance Contracts in The UK are
taxable unless they are specifically exempted .

The following insurance contracts
are exempt from IPT:
• reinsurance;
• life insurance, permanent health insurance and all other “long
term” insurance except medical insurance;
• commercial aircraft and some associated liabilities;
• commercial ships and some associated liabilities;
• lifeboats and lifeboat equipment;
• foreign or international railway rolling stock and some associated
liabilities;
• export finance;
commercial goods in international transit;
• block insurance policy held by Motability which covers all
disabled drivers who lease their cars through the scheme;
• risks located outside the UK; and
• the Channel Tunnel.

What is the higher rate of IPT?
The higher rate of IPT is 17.5%. It applies to insurance sales in three trading sectors
where insurance is sold in relation to goods and services which are subject to VAT:
• sales of motor cars, light vans or motor cycles
• sales of electrical or mechanical domestic appliances (warranties)
• sales of travel insurance.

Surely then the higher rate must be decreased in line with VAT?

Let us know!

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