Increasing the rate of Insurance premium Tax (IPT) in the Chancellor’s forthcoming budget would hit farmers and country people disproportionally hard warns NFU Mutual.

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The rural insurer, which protects over 75% of the UK’s farmers and thousands of other businesses and country people, is concerned that the chancellor could be planning a further rise in the rate of Insurance Premium Tax in the forthcoming budget on October 29.

“We are very concerned that repeated rises in IPT are putting an unfair burden on people who live and work in rural areas,” said Lindsay Sinclair, NFU Mutual Chief Executive.

“Many people probably don’t realise that their insurance premiums already include hundreds of pounds of ‘hidden tax’ every year.

“Since 2005, the Chancellor has doubled IPT from 6% to 12% as a means of increasing Government funds without increasing income tax or VAT.

“For farmers, small businesses, homeowners and motorists this stealth tax unfairly penalises all those who act responsibly by taking out insurance.

“It’s especially hard on people living in the countryside who need to use vehicles to get to work, take children to school or are using tractors, quad bikes and combine harvesters to produce food for the nation.”

For a rural homeowner with a medium-sized car, IPT typically adds over £200 to their annual costs at today’s rates. For a large farm business with a fleet of tractors, a quad bike a 4 x 4 vehicle and a combine harvester in addition to buildings, stock and equipment, IPT could add over £1,000 to their annual costs.