Tax on insurance policies and premiums.

pinkteapot

Quentin wrote: »

Well ........9.5% actually

Oops! I'm out of date. When did that happen?!

EDIT: Answered my own question:
https://www.abi.org.uk/News/News-releases/2015/10/Insurance-Premium-Tax-increase-on-1-November-ABI-sets-out-the-facts

Quentin

pinkteapot wrote: »

oops! I'm out of date. When did that happen?!

1/11/2015.

Aretnap

fiftydd wrote: »

Cast your mind back to the days when, you went into a bookmakers and you paid tax on either the initial bet or the winnings. Then the government disposed of the tax because it was deemed to be taxing your income twice. That's why lottery winning and the like are now tax free.

It was nothing to do with taxing the same income twice -double taxation is perfectly normal. It was scrapped because the online gambling and the rise in offshore betting made it easy to avoid and very difficult to collect. It was replaced by a tax on bookmaker's profits, which is still ultimately paid by the consumer in the form of bigger spreads on the odds offered - you just don't notice it so much.

Do people not think that it should be investigated?

Investigated by whom? Who do you think would have the power to overrule parliament?

Certainly it's a nasty little stealth tax which will hit the poor hardest because the poor tend to pay the highest insurance premiums. But it's hardly unique in that respect. Governments have the right to introduce nasty little stealth taxes if they want to, and it's up to us as the electorate to vote for someone else if we don't like it.

There may be an argument fer getting rid of all indirect taxes and double taxation and simply having a higher rate of income tax. But there are good arguments against it as well. Tax is not just a way of raising money, it's also a way of providing incentives for certain behaviours. The ability to discourage things like smoking by taxing them heavily while encouraging things like saving for retirement by taxing them lightly is a useful one. And in any event scrapping all then other taxes would mean increasing the basic rate of income tax to something like 50%, so until there are people willing to vote for that we're stuck with governments using nasty little stealth taxes to raise money for the services people want them to provide.

forgotmyname

Another late news story from a reporter that failed to notice it increased last year?

Seems to happen more often, im thinking didnt this happen already and check back to find the latest news is several months old.

agrinnall

Given that the OP was unable to do a basic search that would show, as in post #9, that IPT was introduced by a Conservative government and was nothing to do with Gordon Brown or his advisors, should any credence be given to their views on any subject at all?

https://en.wikipedia.org/wiki/Insurance_Premium_Tax_%28United_Kingdom%29#Overview

takman

fiftydd wrote: »

Stay with me on this as it will become clear.
Cast your mind back to the days when, you went into a bookmakers and you paid tax on either the initial bet or the winnings. Then the government disposed of the tax because it was deemed to be taxing your income twice. That's why lottery winning and the like are now tax free.
Now, you take out an insurance policy with XYZ for ABC. The premiums for that policy are taxable, even though you've already paid tax on the earnings of those monies which pay the premiums.
Isn't the insurance that you have taken out, a gamble? The insurance company is gambling that you will loose the bet and they won't have to pay out. You are gambling that you will win the bet and they will have to pay out. (Irrespective whether or not they will find a loophole not to pay out). It's a gamble on both sides. It's a bet and the betting slip is the policy. Further to this, if the insurance does pay out, the tax paid on the premium is not justified as there are no dividends because it isn't an investment. There is no financial gain because you have paid the premium, like saving for a rainy day without any banking interest being paid. It's the results of a gamble. If the policy does not pay out, you have lost the bet and there is no payout and so the tax has been paid for nothing. There is no financial gain. This is the same with all insurance policies, whether it is car insurance, home/contents insurance, life insurance, holiday insurance etc.
When Gordon Brown was the Chancellor of the Exchequer, he brought in the tax on insurance premiums and he was warned at the time by his advisers that he was on shaky ground and to think twice about it.. No one bothered about it, they just paid the tax, so he, (the government) got away with it. Now the government are going to increase the tax on the premiums paid. Do people not think that it should be investigated?

An insurance policy is nothing like a bet. With a bet you may win money and end up financially better or loose money and end up financially worse.
With insurance you either don't make a claim and are worse off by the full premium. Or you make a claim they replace everything that is insured and you loose the excess and still have to pay the premium.

If your "betting" that you will have to make a claim and compare that to winning a bet. Then you must have a very poor understanding of how insurance policies work!