Charities to continue to pay insurance premium tax
Insurance premium tax affects charity budgets
With increases in insurance premium tax set to continue, the question is should charities be exempt?
MPs have questioned the government's stance to force charities to continue paying insurance premium tax (IPT), which currently stands at 12%.
IPT is a tax added to general insurance premiums on purchases like car and home insurance. Many charities, and particularly those with property, are also affected by IPT. In recent years the tax has become a growing concern for charities, as it has doubled over a period of just 18 months, and many believe it is unfair for organisations set up to help should face such a large cost.
Insurance is essential for charities to protect themselves and continue to operate, so is an unavoidable running cost.
Exempting charities would be 'challenging'
The government has said 'it would be challenging to implement an exemption for insurance purchased by one specific group'. While it insists that all tax policy is kept under review, it is clear that charity exemption from IPT is unlikely to happen any time soon.
The campaign for charities to be made exempt does continue. Organisations such as the Charity Finance Group and Charity Tax Group launched a petition at the end of 2016 and continue to campaign and lobby the government.
How to limit your charity insurance costs
For a charity, when purchasing insurance the most important consideration should always be the cover and if it really meets their needs. In order to help keep insurance costs manageable charities should be accurate in the information they provide so they're not paying a higher premium for cover they may not require.
Why charities should speak to CARE
CARE are experts in the third sector, specialising in insurance solutions for charities and aid organisations. CARE can arrange cover through 'A' rated insurers and help manage the costs of cover.