Ahead of next Wednesday’s Budget (11 March), specialist insurer Ecclesiastical has joined forces with the Charity Finance Group (CFG) to urge the Chancellor to make charities exempt from paying Insurance Premium Tax (IPT).
Ecclesiastical – insurer of more than 45,000 charities and not-for-profit organisations in the UK – has been working with CFG for the past three years to raise awareness of the impact of the continuing IPT increases on charities. The standard rate of IPT has doubled since 2015 from 6% to 12%.
While Insurance Premium Tax is a tax on general insurance premiums, such as home, car and travel insurance, the vast majority of charities, especially those who own property and have significant operational costs, are also impacted.
The Association of British Insurers (ABI) has also called on the Government to cut IPT, claiming total IPT revenues for government between 2015 and 2019 jumped by 98%.
Angus Roy, Ecclesiastical’s charity director, 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.
“Many charities are paying hundreds of pounds 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.”
Richard Sagar, Policy Manager at CFG, 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, or at the very least not increase it further.”
Insurance Edge Comment;
This is a valid point. It’s also a valid pint that no charity CEO should be paid more than 100K a year and that accounts should be audited and submitted to HMRC annually. Then published online so the public can see where their donations are being spent.