Insurance and savings trade body the ABI has called on the Government to scrap Insurance Premium Tax (IPT).
IPT applies to most general insurance policies, including motor, home, pet and Private Medical Insurance.
The standard IPT rate has doubled to 12% since it was introduced in October 2015.
Over two-thirds of people (67%) have little or no knowledge of IPT, despite around 84% of UK households paying it, making it UK’s “hidden in plain sight” tax, according to the ABI.
Half of consumers surveyed said they had little or no idea of the impact that IPT had on their insurance costs.
On a £200 a month Private Medical Insurance Policy IPT would add £24 a month in cost.
The ABI estimates that IPT receipts will surpass £8bn this tax year, with current receipts up 10% vs the previous financial year.
To end Jan 2024 IPT has brought in £6.7bn, compared to beer duty (£3.1bn), spirit duty (£3.7bn), tobacco duty (£7.3bn) and gambling tax (£2.3bn).
Mervyn Skeet, director of general insurance policy, at the ABI said: “It is high time we unmask this tax which penalises people and businesses for being responsible.
“This tax hits the poorest hardest because they typically spend more on insurance, such as home and motor cover, as a proportion of their income.
“There has never been a better time for the government to show its support to the millions of homeowners and businesses who do the right thing by buying insurance. We should cut IPT now.”
To power its campaign calling for a cut in IPT, the ABI has created a mascot, named Snippy.
Created by the costume production team behind the hit ITV show ‘The Masked Singer’, Snippy is a human-sized pair of scissors billed by the ABI as helping to ‘unmask’ IPT as a tax that punishes responsible choices.
• The ABI and OnePoll surveyed 2,000 insurance customers.
