In his March 2016 Budget, the Chancellor, George Osborne, announced a further increase in Insurance Premium Tax (IPT) to 10%, effective from 1 October 2016.
Stuart Scullion, Chairman of the Association of Medical Insurers and Intermediaries (AMII), commented: “Although Insurance Premium Tax will only increase by 0.5 per cent, we are disappointed to note how this tax will impact on private medical insurance as well as cash plans, and subsequently the National Health Service (NHS).
“We do believe more support is needed to improve flood defences in the UK and we express great sympathy for those who have been affected by the flooding. However, it does not make sense to fund this through penalising those people who are choosing to prioritise their health through private medical insurance and health cash plans.
“As the second increase in six months, in a market where premiums are on the increase already, this new change could be the difference between someone maintaining their health insurance or leaving the market and going back into the NHS.
“Furthermore, this results in a double hit for employees in companies with health insurance or health cash plan benefits. These employees will effectively be taxed twice and, rather than incentivising employers to offer health benefits to staff, this will further discourage this type of support and increase the burden on the NHS.
“Quite simply, blanket increases in IPT like this will continue to have a significant impact on the NHS and we strongly believe health related insurance should be exempt from the tax.
“AMII will be making representations to Government to express our views and the likely impact of this announcement.”