The Charity Finance Group and the insurance firm Ecclesiastical have called for an insurance premium tax exemption for charities to be granted in the forthcoming Budget.
The rate of IPT, which is a tax on general insurance premiums such as buildings or car insurance, has doubled in recent years, and the CFG and Ecclesiastical are arguing that charities should be treated differently from commercial organisations.
This has long been an issue for the sector, with the rate doubling from 6 per cent in late 2015 to 12 per cent in June 2017, amid worries in the sector at the time that it would rise further to be in line with VAT, which stands at 20 per cent.
A petition was launched in 2017 calling for charities to be exempt from the tax, but the government has so far resisted excluding the sector from the burden of IPT.
The Budget is due to take place on 11 March and will be the first since last year’s landslide Conservative general election victory.
Richard Sagar, policy manager at the CFG, said: “Spending on insurance premium tax has substantially increased for charities in recent years, which has meant they have less money to spend on delivering charitable objectives and helping beneficiaries.
“In keeping with the principle that money donated for public benefit should not be taxed, we would urge government to consider exempting charities from insurance premium tax, or at the very least not increase it further.”
Angus Roy, charity director at Ecclesiastical, said: “Many charities are paying hundreds of pounds in insurance premium tax on top of their insurance premiums.
“The government has long recognised that charities should be treated differently from commercial businesses by granting reductions and exemptions from other taxes, including VAT, business rate relief and Gift Aid, so it seems unfair that insurance premium tax is an exception to that rule.
“We are urging the government to consider very carefully the negative impact that insurance premium tax is having on the work that charities do and consider granting them an exemption from this tax.”