On October 1st Insurance premium tax will be increasing again to 10%. Is there any way to avoid the increase or the tax?
As Benjamin Franklin once said, ‘in this world nothing can be said to be certain, except death and taxes’, and if insurance premium tax had been around in 1789, then I’m sure Franklin would have had insurance tax in mind too when he penned those words!
The increase may be small, rising from the current rate of 9.5%, but considering it started at 2.5% when introduced in the 90’s, and some people in the insurance industry feel the rate could continue to rise in the future, perhaps as high as VAT, this could become a costly addition to your insurance bill, particularly if you are in business, when your insurance could be costing thousands!
So assuming I still need to insure my business, is there a way I can perhaps reduce my premiums to reduce the amount of tax paid?
By renewing on or before the 30th September 2016, you will save .5%, which isn’t really a good incentive to change your renewal date, but there are definitely some things you should consider doing:
1. Have you asked your insurance broker if they have obtained alternative quotes in recent years. Loyalty is good, but it can come at a price. Your insurers needs to be challenged from time to time.
2. If you don’t make claims and pay a significant premium, do you get a rebate at the end of the year if you renew again? Agreements can be put in place with some insurers to rebate premium to you if you have had no claims and agree to renew with them. This can be anything from 5% to 15% of your annual premium!
3. Have you considered a larger excess? If you wouldn’t make a small claim, consider taking a larger policy excess and taking a discount on the premium.
4. Are your insurers aware of all the improvements you may have made to your business. Perhaps improved Health & safety or security, or other measures that you feel reduce the risk and should be reflected in your premium?
5. Are you paying for ‘extras’ you don’t need? We see a number of policies where additional cover has been added that may have been needed a few years ago, but are no longer relevant. Have you gone through your cover thoroughly to ensure you are only paying for what you need?
6. And of course, have you had a chat with IFM Select? You may find we can save you 10% on your premium, which would be the equivalent of paying no insurance premium tax compared to staying where you are!
We have been saving clients money on their insurances costs for over 25 years, and as Chartered Insurance brokers, you can be sure of getting professional local advice from people who really want to help.