Charities have been warned to expect higher insurance premiums as a result of the rise in Insurance Premium Tax (IPT) from 10 to 12 per cent.
As charities do not benefit from an exemption from IPT, insurers that opt to pass on these costs to consumers will also pass them on to not-for-profit organisations.
John Hemming, chairman of The Charity Tax Group (CTG), whose organisation campaigns for a fair tax deal for charities, said the move will have a disproportionate effect on those with a large portfolio of operational buildings and extensive transport and travel commitments.
A recent survey carried out by the CTG found that, for the largest five insurance payers in its survey alone, the increase will cost a total of £170,000, with their total IPT costs in 2017 now over £1 million.
The CTG is now calling on the Government to either freeze IPT increases for charities or extend existing limited reliefs.
“While we recognise that it would be inappropriate for charities to benefit from exemptions on private medical insurance for staff, there is a very strong case for relief where insurance is a necessary and responsible requirement as part of core charitable activities,” said Mr Hemming.
Although some organisations will shrug off the cost of an increase in IPT, for some weary charities – many of which are already struggling with spiralling overheads such as rental increases, workplace pension obligations and other financial burdens – this latest tax hike will only add to their financial worries.