Since November 2015 three successive Government rises will have doubled the rate of IPT by June this year from 6% to 12%. IPT affects more than 50 million policies and applies to policies purchased by businesses, charities and individuals. Taken together, the three increases will raise over £13 billion for the Government over five years.

This increase has a disproportionate impact on charities – in particular those with large portfolios of operational buildings –directly reducing the funds available for the pursuit of their charitable purpose. Those who try to act responsibly, ensuring that they have all the correct insurance in place, will be the worst affected.

The Charity Tax Group acknowledges that it would be inappropriate for charities to benefit from an exemption on private medical insurance for staff, for example. However, we believe that there is a very strong case for some level of relief where insurance is a necessary and responsible requirement of core charitable activities, for example where it protects volunteers working in dangerous areas.

The letter, which has been issued to press outlets, states:Insurance is a basic financial safety net for tens of millions of people and businesses across the UK. The Government’s decision to double the standard rate of insurance premium tax (IPT) from 6% to 12% in less than two years has driven up the cost of over 50 million insurance policies. IPT is a stealth tax that hits households, charities and businesses who do the right thing and these increases have cost some families hundreds of pounds a year already. 

IPT is a tax on productivity too. Unlike VAT, which most businesses can claim back, it hits insurance dependent industries like manufacturing, construction and exporters the hardest. The Institute of Fiscal Studies recently said that problems with IPT were now ‘more severe’ as the rate has become ‘too high’.

It is time to end this raid on the responsible by cancelling the planned June IPT increase and freeze it for the remainder of this Parliament.

Yours Sincerely,

• Huw Evans, Director General, Association of British Insurers (ABI)
• Inga Beale, Chief Executive, Lloyds of London
• Edmund King, President, The Automobile Association (AA)
• Steve White, Chief Executive, British Insurance Brokers’ Association (BIBA)
• Mike Cherry, National Chairman, Federation of Small Businesses (FSB)
• Caron Bradshaw, Chief Executive, Charity Finance Group
• John Hemming, Chairman, Charity Tax Group
• Miles Celic, Chief Executive, TheCityUK
• Brian Berry, Chief Executive, Federation of Master Builders (FMB)
• Laurence Besemer, Chief Executive, Forum of Insurance Lawyers (FOIL)
• Iain Elliot, Chairman, Forum of Scottish Claims Managers
• Dave Matcham, Chief Executive, International Underwriting Association (IUA)
• Christopher Croft, Chief Executive, London and International Insurance Brokers’ Association (LIIBA)
• Charles Manchester, Chairman, Managing General Agents Association (MGAA)
• Richard Burnett, Chief Executive, Road Haulage Association (RHA)
• Martin Sime, Chief Executive, Scottish Council of Voluntary Organisations (SCVO)
• Ruth Marks, Chief Executive, Wales Council for Voluntary Action (WCVA)