Insurers are much more optimistic about the development of tax policy in the UK compared to a year ago, but more still needs to be done by the government to improve the lack of certainty and high complexity of the tax regime.
This is according to a PwC poll of insurers ahead of Tuesday’s Autumn Statement which reveals that the majority (56%) are feeling more positive about the development of tax policy in the UK compared to a year ago. 81% of those polled are also optimistic that the UK business tax regime will be competitive enough to allow the UK to capitalise on market opportunities.
Despite clear signs of encouragement for the sector, the majority of insurers polled (67%) still feel the lack of certainty and high complexity of the UK tax regime is the most significant barrier to competitiveness.
Insurers will be paying close attention to the Autumn Statement and the detailed rules which will be published on 6th December 2011.
Colin Graham, UK insurance tax leader at PwC, said:
“The Autumn Statement and publication of new rules in December are of fundamental importance to the future international competitiveness of the UK insurance sector. We are in the final stages of corporation tax reform and there is a once in a generation chance to get this right.
“Industry has been lobbying since 2009 on key aspects of business tax reform and conversations with government in the last few months have been very encouraging – particularly on the rules that apply to overseas subsidiaries of UK insurance groups. The government appears to recognise London’s position as a leading global insurance centre and that UK tax rules need to support this.
“We have already witnessed one high profile announcement of an insurer moving back to the UK this year and we may see more over the next year if the anticipated rule changes come through into legislation next summer. These rule changes could potentially make the UK more attractive for group headquarters, as well as a hub for pan-European operations of internationally based groups.
“Despite the clear signs of progress, one area where the industry would like to see further development is the current lack of certainty and high complexity associated with the UK tax regime. We certainly don’t want to see continued tinkering with these new rules – companies need to be confident in the stability and sustainability of the tax rules when they are making key business decisions.”
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