The ABI’s submission to the Spring Budget 2023, calls for:
The rate of insurance premium tax (IPT) on health insurance to be cut. The majority of health insurance is provided through the workplace. With ill-health increasingly responsible for declining workforce participation, insurers have an important role to play in keeping people healthy and able to work. If IPT were to be lowered from its current rate of 12%, it could help reduce barriers to the uptake of health insurance by employers and employees and ease the pressure on the NHS.
A pensions tax relief system that incentivises work and savings and doesn’t penalise over 55s who choose to return to work. The approach to increasing the Normal Minimum Pension Age should be reconsidered. As it stands, it will add enormous complexity rather than supporting savers. The Money Purchase Annual Allowance should be removed or, at a minimum, changed back to £10,000 to allow over 55s who have returned to work to continue saving towards their retirement.
The IPT rate for other insurance policies to be frozen. We continue to believe that IPT is a regressive taxation that penalises responsible households and business who are protecting themselves from financial shocks. Since its introduction, IPT has increased more rapidly than the tax rate applied to alcohol and gambling.
The rate of IPT to be cut on buildings insurance for high-rise, high-risk buildings with dangerous cladding whilst the property is awaiting remediation. We remain acutely conscious of the challenges facing those affected by the ongoing building safety crisis and continue to work with our members on the development of a risk sharing scheme that can help leaseholders with their insurance premiums. In the meantime, with IPT at 12%, the Government could take immediate action by cutting the rate applicable for affected buildings to reduce costs for leaseholders.
The delay to the implementation of Pillar Two of the OECD global tax rules in the UK. The UK is moving faster than any other member of the G7 to implement Pillar Two of these rules. Both pillars should be implemented across all countries in a consistent way, at the same time. We urge the Government to pause until global rules are agreed and set.
Hannah Gurga, ABI Director General says:“The insurance and long-term savings industry stands ready to work in partnership with Government and regulators to tackle the economic challenges facing the UK. Changes to the tax regime could help businesses to prevent ill-health and keep employees in work, alongside encouraging more over 55s to return to employment and resume saving for retirement. Changes to insurance premium tax and the pensions tax relief system can enable our sector to support more businesses, more employees, more savers and ultimately help drive growth across the economy.”
“We are working at pace on the development of a risk sharing scheme and fully recognise the role the insurance industry has to play in supporting leaseholders with the high costs of buildings insurance. However, there are options within the Government’s control that could further help reduce costs for leaseholders and we ask that the IPT rate for affected buildings is considered as one such measure.”
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