| Link(s): | Spring Budget 2023: Reform tax rules to support a thriving workforce and help boost the economy | ABI spring-budget-2023—abi-submission-february-2023.pdf |
Context
The ABI is calling for changes to health insurance tax and the pension tax relief system to enable insurance and long-term savings providers to help more businesses keep people in work. Alongside pausing the implementation of global tax rules in the UK, these suggested reforms could help the Government with its focus on providing stability and driving economic growth.
Key points to note
The ABI’s submission to the Spring Budget 2023, calls for:
- The rate of insurance premium tax (IPT) on health insurance to be cut. The majority of health insurance is provided through the workplace. With ill-health increasingly responsible for declining workforce participation, insurers have an important role to play in keeping people healthy and able to work. If IPT were to be lowered from its current rate of 12%, it could help reduce barriers to the uptake of health insurance by employers and employees and ease the pressure on the NHS.
- A pensions tax relief system that incentivises work and savings and doesn’t penalise over 55s who choose to return to work. The approach to increasing the Normal Minimum Pension Age should be reconsidered. As it stands, it will add enormous complexity rather than supporting savers. The Money Purchase Annual Allowance should be removed or, at a minimum, changed back to £10,000 to allow over 55s who have returned to work to continue saving towards their retirement.
- The IPT rate for other insurance policies to be frozen. The ABI continues to believe that IPT is a regressive taxation that penalises responsible households and businesses which protect themselves from financial shocks. Since its introduction, IPT has increased more rapidly than the tax rate applied to alcohol and gambling.
- The rate of IPT to be cut on buildings insurance for high-rise, high-risk buildings with dangerous cladding whilst the property is awaiting remediation. The ABI remains acutely conscious of the challenges facing those affected by the ongoing building safety crisis and continues to work with its members on the development of a risk sharing scheme that can help leaseholders with their insurance premiums. In the meantime, with IPT at 12%, the Government could take immediate action by cutting the rate applicable for affected buildings to reduce costs for leaseholders.
- The delay to the implementation of Pillar Two of the OECD global tax rules in the UK. The UK is moving faster than any other member of the G7 to implement Pillar Two of these rules. Both pillars should be implemented across all countries in a consistent way, at the same time. The ABI urges the Government to pause until global rules are agreed and set.
Next actions
None – for information and awareness.