Standard rate Insurance Premium Tax is on the up. Is it time to review your Charity Insurance?

Phillip Hammond announced an increase in the standard rate Insurance Premium Tax (IPT) in the Autumn Statement, an increase that will affect charities. With this change in taxation coming in mid-2017, your next renewal could be key to saving money on your insurance.

We’ve heard a lot about JAMs in the media during the Autumn Statement. A lot of charities fall into this category of ‘Just About Managing’ and they won’t welcome the Chancellor’s announcement that standard rate IPT will go up to 12%. It is safe to say that this increase of 2% (on top of the recent move to 10% just two months ago) has not been met with jubilation in civil society.

So, what can charities do about this increase in costs?

Firstly, there is always the option to speak to any membership or umbrella organisations that you’re part of, and colleagues in other voluntary organisations, and lobby against this increase (or even lobby for a complete exemption for charities). Make It Cheaper have done research into public opinion on charities and IPT and, with overwhelming support for a reduction or exemption, it would seem that charities are in a strong position to lobby against IPT.

In the short-term, however, the best way to reduce the impact of this increase in IPT is to find an insurance policy that gives you the same or better cover than you have now, but keeps your premium to the pre-increase level. Or which maybe even reduces the cost.

The Charity Tax Group represents charities on tax issues and is running a survey on the recent IPT increases. The CTG also created the Charity Tax Map that demonstrates how charities’ IPT overheads were sizeable in 2011 – when the report was published – and, when IPT was 6%. The percentage of charity income that is now going to be spent on IPT simply underlines the importance of keeping your overall premium low.

CaSE Insurance was set up (and is part-owned) by NCVO and BWB to provide appropriate and cost effective insurance for charities, voluntary organisations and social enterprises. Please download a copy of our Guide to Charity Insurance or ring us on 0333 800 9838 for friendly and impartial advice.