The long-anticipated rise in insurance premium tax (IPT) is now just weeks away.
Unwelcome by many, the construction sector, in particular, is bracing itself for the impact. Here Martin Bennison, Head of Construction, gives his thoughts on the key things you’ll need to know from June to help you manage the changes…
1. The rate of IPT will rise on June 1st 2017 by 2% to 12% on all non-exempt transactions. The rise, the third in 18 months, was announced by Philip Hammond in his Autumn Statement in 2016 and will bring an extra £650 million into the Treasury in the next financial year alone.
2. Very few people are happy about it. In fact, it’s hard to find anyone outside the HM Treasury who thinks the rise is good idea. The Association of British Insurers said the rise was a “hammer blow for the hard pressed” and representatives from all the major insurance sectors, both private and commercial, have decried what they see as a “stealth” rise.
3. There are fears that construction industry will suffer particularly. So says the Federation of Master Builders (FMB) which said that small and medium-sized construction firms often can’t afford to absorb the costs themselves and will have to raise their prices. This leaves them more vulnerable than ever to being undercut by less reputable firms, working cash-in-hand who pay no IPT whatsoever.
4. It’s an unwelcome piece of bad news at a time when the construction sector is on the up. Housebuilding and civil engineering projects have both shown impressive growth in recent months, despite prediction of a negative “Brexit effect” and it would be a shame if the rise in IPT did anything to slow this upward trajectory.
5. Help with business finance and cashflow is available. We’re proud of our record in supporting the construction industry and our specialist construction finance product is available to any business that’s been trading for at least a year and has a turnover in excess of £500K. We also have a range of other products designed to give businesses the financial help they need.
If the rise in IPT is giving your business a financial headache, then why not get in touch? Our friendly, expert team will be very pleased to help.