Should charities be exempt from paying Insurance Premium Tax (IPT)?
The Budget is due to be announced on Monday 29th October 2018 by the Chancellor and two organisations have joined forces to make charities exempt from paying Insurance Premium Tax.
Ecclesiastical, who insurer over 45,000 charities and not-for-profit organisations in the UK have come together with Charity Finance Group (CFG) and have been working together since 2017 in order to raise awareness of the impact of the continuing IPT increases on charities. The IPT rate has doubled from 6% to 12% since 2015.
In a show of support for this, last week the Association of British Insurers (ABI) has also had a say in this IPT debate by launching its #IPTsUNFAIR campaign aimed at convincing the Government to freeze increases for both individuals and businesses.
Insurance Premium Tax is a tax on general insurance premiums, such as home, car and travel insurance. However, the vast majority of charities, especially those who own property and have large operational costs, are also impacted by the tax.
Ecclesiastical’s charity director, Angus Roy said: “Buying insurance is an unavoidable cost for charities – either because they are legally required to, or because they are acting responsibly by putting adequate protection in place for their activities and assets.
The average charity is paying £300 in IPT on top of their insurance premiums. The Government has long recognised that charities should be treated differently to commercial businesses by granting reductions and exemptions from other taxes, including VAT, business rate relief and Gift Aid, so it seems unfair that IPT is an exception to that rule.
We are urging the Government to consider very carefully the negative impact that IPT is having on the work that charities do and consider granting them an exemption from this tax.”
Further to this, Richard Sagar, Policy Manager at CFG has said: “Spending on Insurance Premium Tax has substantially increased for charities in recent years, which has meant they have less money to spend on delivering charitable objectives and helping beneficiaries. In keeping with the principle that money donated for public benefit should not be taxed, we would urge government to consider exempting charities from Insurance Premium Tax.”