HM Treasury has no plans to reduce the amount of insurance premium tax paid by charities, ministers have said, in response to a question in Parliament.
Insurance Premium Tax is set to rise from 10 per cent to 12 per cent in June and the charity sector has been lobbying for an exemption. This is the third increase in recent years, from a base of 6 per cent in 2015.
In a written statement to Parliament Jane Ellison, financial secretary to the Treasury, said: “While all tax policy is kept under review, it would be challenging to implement an exemption for insurance purchased by any specific group.”
She said the government was supporting the charity sector in other ways through tax reliefs “worth over £5bn in 2015-16” and “as also made up to £42m per annum available for the Listed Places of Worship Grant Scheme and at Budget 2016, the Government announced a further £20m to the First World War Centenary Cathedrals Repairs Fund”.
Ellison also said it is “up to insurers to decide whether to pass on any tax paid”.
The Charity Finance Group has said that scrapping the tax for charities could save the sector £87m per year and included it in a range of proposed reforms for the tax system to save charities money.
Last year Simon Hickman, chief executive of Access Insurance, started a campaign calling for charities to be exempt. A petition on Parliament’s website has been signed by almost 1,000 people.
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