IPT rises 0.5 of a percentage point
The rise from 9.5% to 10%, which will come into effect on 1 October, is less than the 3 percentage point hike that had been predicted but it follows an increase from 6.5% to 9.5% in November 2015 and is likely to result in a rise in the cost of Corporate and Private insurance, Mr Osborne says that he will ring-fence the extra money raised to pay for improved flood defences across the North of England.
IPT is a tax on insurers but the cost is passed on to consumers through the price of policies , IPT was first introduced on 1 October 1994 at a rate of 2.5% and has seen increases to 4% then 5% then 6% prior to the November 2015 increase. Not all types of insurance will be affected. Private Travel insurance policies, for example, will be excluded from the increase as they are already charged at a higher rate of 20%, which isn’t changing.