A leading commercial vehicle insurance broker has expressed surprise that the logistics sector has not reacted more angrily to the 3.5% hike in insurance premium tax (IPT) that came into effect this month.
The rise, which was announced in the Budget in July and affects a range of insurance policy types including motor insurance and national goods-in-transit (GIT) cover, as well as buildings, contents, public liability and employer’s liability policies, leaves IPT adding 9.5% to basic premiums.
The increase is expected to raise about £1.5bn of additional tax revenues a year from 2016 onwards. The new rate of IPT is substantially above the 2.5% levied when it was first introduced in 1994.
Steve Green, director of Anthony Jones Insurance Brokers, told MotorTrasnsport.co.uk there were “substantial implications” given that the tax hike would inevitably be followed by rising insurance premiums soon.
“It’s a 50-odd percent increase and it’s a surprise to me that industry bodies and trade bodies have said very little about it,” he said. “The worry is, will the government continue to accelerate the tax if there isn’t anger?”
Green’s comments follow those of Anthony Jones MD Terry Marshell, who said the latest hike could be just the beginning in terms of increasing insurance costs for truck operators.
“If you look at what’s happening elsewhere in Europe, where you have an equivalent of IPT at 20%, I have no doubt this is the start of something yet to come,” Marshell warned. “I think the 9.5% is the tip of the iceberg.”
Nick Deal, manager, logistics development at the RHA, appeared unconcerned by the latest IPT hike. “I think that while the tax is there, it is without doubt claims experience that concludes the size of fee for cover,” he said.
But Green said there was an argument the government was effectively seeking to replace the duty lost from falling fuel prices with the IPT hike.
