#NoCharityIPT. Campaign to Exempt Charities from Insurance Premium Tax. Information Pack & Toolkit Spearheaded by Access Insurance

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1 #NoCharityIPT Campaign to Exempt Charities from Insurance Premium Tax Information Pack & Toolkit Spearheaded by Access Insurance

2 Help us Help Charities to Eliminate Tax Expenses The Issue A further rise in the rate of standard UK Insurance Premium Tax (IPT) was announced on the 23 rd November by the Chancellor in his Autumn Statement. Effective 1 st June 2017, the rate of IPT charged on most insurance premiums will increase to 12%. This represents a 100% increase in just over an 18 month period. Organisations and individuals faced a hike in IPT when the Government increased the rate from 6% to 9.5%, effective 1 st Nov This was increased once more to 10%, which came into effect on the 1 st Oct Many industry experts believe the Government s eventual aim is to bring IPT in line with VAT at 20%. These increases in IPT have and will continue to negatively affect charities who have already suffered in the last few years from reduced income, while seeing an increase in the demand for their services. It is disappointing to see the Government take aim at organisations and individuals who have a responsible attitude to risk, who have chosen to pay to protect their assets and liabilities. This is not a tax on insurers but a tax on policyholders. Simon Hickman FCII, CEO Access Insurance & Chartered Insurance Broker We already know that we have a major problem with under-insurance in this country. As IPT is increased for the third time in less than two years, it is inevitable, in some cases, that this will directly result in organisations reducing the types of cover and limits which they purchase in an attempt to counter the increases in their premiums. In the longer term, this may well lead to organisations finding they don t have the cover they need when they suffer a loss and need to make a claim. Chris Newberry ACII, Underwriting Manager Access Insurance Increase in Insurance Premium Tax: Effective Date Rate of IPT 4 th January % 1 st November % 1 st October % 1 st June % Charities have faced tough financial challenges in the last few years, especially with the reduction in government funding for non-profit organisations. We believe the Government should be doing everything it can to support the vital work charities are doing, not imposing unnecessary costs on them. UK charities are currently exempted from paying tax on donations, profits from trading, rental and investment income, profits when selling an asset and when purchasing property. They also receive an 80% reduction in business rates. Should it choose, the Government could introduce a simple exemption from, or reduction in, IPT for all UK registered Charities. This is the outcome we aim to achieve.

3 The Impact The total lost income to the Government for agreeing to exempt charities from IPT would be insignificant compared with the total additional funds raised by this tax increase. It would however benefit charities enormously. The total premium spend of the charity sector is estimated at around 400,000,000 meaning, from 1 st June 2017, approximately 48,000,000 will be paid by charities in Insurance Premium Tax. This is an additional 48,000,000 which could be used by charities to achieve their aims. What can you do? We firmly believe that if enough charities raise this issue the Government will listen and take action. The best way to show that a Charity IPT exemption is urgently needed is to demonstrate the impact that increases in the IPT rate have had and will have on your charity. 1) Follow the campaign on Retweet and spread the word so more charities get can get involved. 2) Sign the petition! 3) Write to your local MP asking them to represent your charity s interests in Parliament by asking for an exemption in Insurance Premium Tax. A template letter is included in this pack. 4) Consider the impact this will have on your organisation by putting together a short case study (examples below). You may want to include this with your letter to your MP. 5) Get in touch with us (charity@accessinsurance.co.uk) if you need help, assistance or advice. Case Study 1 Scout Groups This tax burden also has an effect on much smaller charities. Access Insurance acts as broker and professional insurance advisor to several hundred Scout Groups. Most Scout Groups have very limited incomes often just several thousand pounds. They purchase insurance to protect their assets, which are used for the benefit of young people and the public. On average, each group will spend around 650 (before tax) on insurance for their property. The table below illustrates the increases over the last 18 months, as well as the amount should IPT be increased to 20% in the future. Effective date of increase Rate of IPT Amount of tax payable Monthly fundraising to pay for IPT 4 th January % st November % st October % st June % Possible future increase 20% Increases in the rate of IPT mean Scout Groups have to raise more and have less to spend on providing activities to young people.

4 Case Study 2 Neighbourhood Watch Access Insurance acts as the broker and professional insurance advisor to the Neighbourhood & Home Watch Network. Access Insurance and the Neighbourhood Watch have discussed the impact of rises in the rate of IPT. The Neighbourhood Watch is a national registered charity aiming to bring neighbours together to create strong, friendly, active communities where crime and anti-social behaviour are less likely to happen. Their vision is to have a caring society that is focused on trust and respect in which people are safe from crime and enjoy a good quality of life. Neighbourhood Watch is about making sure that no one has to feel afraid, vulnerable or isolated in the place where they live. The charity is made up of local groups, which are represented by the Neighbourhood & Home Watch Network. There are 3.8 million members and 170,000 volunteers who work together and in partnership with the police, and other organisations, to make their communities safer places to live. The Neighbourhood Watch has an income of 352,500, some of which comes in the form of a grant from The Home Office. Buying insurance to cover staff, volunteer coordinators (employer s liability), members of the organisation and the public (public liability) is necessary: 1) To comply with statutory requirements. 2) To protect the organisation should it be held liable for negligence. The cost of the insurance (before tax) is in the region of 24,000. The table below illustrates the increases over the last 18 months, as well as the amount should IPT be increased to 20% in the future. Effective date of increase Rate of IPT Amount of tax payable 4 th January % 1,440 1 st November % 2,280 1 st October % 2,400 1 st June % 2,880 Possible future increase 20% 4,800 The Neighbourhood Watch says if the rate of IPT continues to rise they will have no choice but to either: a) reduce insurance cover or b) reduce staff costs in an attempt to counter this extra tax burden. Case Study 3 Owners of Heritage Property A large amount of heritage property is owned by charities. Charities are tasked with caring for some of our most historic and unusual buildings: almshouses, castles, cathedrals, churches, country houses, dockyards, forts, palaces, mills, theatres and a whole host of other culturally-important assets. Insurance for these charities often takes up a sizable portion of their income due to the large insurable value of these properties and their listed status. Often faced with maintaining these assets with very limited resources, property charities will now face the increased IPT burden. This will mean they will have fewer resources to preserve and promote the wonderful cultural buildings they own. With increases in IPT resulting in less money to spend on non-insured essential maintenance and repairs and less money to put in place adequate insurance, some of these properties will be at risk of decline.

5 Template Letter to Your MP [insert name] MP Member of Parliament for [constituency name] Address 1 Address 2 Address 3 Postcode [DATE] Dear Member of Parliament I am writing to you, as our charity s local MP, to speak up on our behalf in Parliament on the impact of the increase of Insurance Premium Tax on our charity. In June 2017, Insurance Premium Tax will increase to 12%. This represents a 100% increase in just over an 18 month period for all consumers, including charities. We have to put insurance in place to protect the people we provide support to, our volunteers, our staff and to ensure that our resources are properly protected. No one privately benefits from this; we are doing this to protect our assets and income which are used exclusively for public benefit. Despite the fact that no one privately benefits from the insurance, charities are still required to pay Insurance Premium Tax. This directly impacts what resources are available for delivering our charitable objectives and ultimately it is people that will suffer. It also means that our charity, and others, may have to consider cutting back on insurance because of increased costs at a time when charities are seeing their income squeezed. Access Insurance and the Charity Finance Group are campaigning for charities to be exempted from Insurance Premium Tax so that they are not negatively impacted by this policy. I d urge you to contact them (charity@accessinsurance.co.uk and policy@cfg.org.uk) to find out more information. I would like you to use your position to raise questions in the House of Commons and write to the Charities Tax Minister, Jane Ellison, to ask that she considers the impact of the Insurance Premium Tax increase on the sector and what steps are being taken to mitigate the costs for charities like ours. It is critical that you act now because that further 20% increase in the tax is due to come into effect in June 2017 and we urgently need the Government to consider this issue now. Thank you taking the time to consider this issue. Kind regards [insert name & job title & charity name]