Insurance broker Towergate has warned the Chancellor against rises in taxes on premiums, saying it will damage small businesses and create more work for the industry.
Bosses at the Maidstone-based firm made the claims amid suggestions George Osborne plans to increase insurance premium tax to 12.5% in his forthcoming budget this week.
The Chancellor must deal with an £18 billion black hole in public finances if he is to keep his pledge of running a budget surplus by 2020.
A move to increase taxes in the insurance industry would be a double blow after the Government raised insurance premium tax from 6% to 9.5% in November.
David Armstrong, Kent area director at Towergate, covering offices in Sevenoaks and Faversham, said he could imagine Mr Osborne targeting the sector in his speech on Wednesday because “it’s too easy”.
He said: “It is no work at all for the Government and most people have to carry on buying it.
“However, it is of no use to insurers as it does nothing for our growth, some IT systems may not be geared up for the change and it adds work for underwriters who have to do more quotes as people are forced to shop around to get a better deal.
“Also, to cut costs, some businesses may try to work out what policies they can do without. Then, by the law of averages, within 12 months they get a claim.
“Tax increases get people focused on cost rather than what is needed, particularly among small businesses.”
Earlier this month, the Chancellor was forced into a climb down on any major pension reforms in this budget but some Kent experts believe some changes may still be on the cards.
Clive Stevens, executive chairman of accountancy firm Kreston Reeves, based in Canterbury, Chatham and Sandwich, said: “Although pension tax relief now lives to die another day, Mr Osborne has not ruled out reducing the cap on pensions further, or a limit on annual contributions.
“The small print of any apparent giveaways will need careful scrutiny this year, given that the Chancellor is trapped by a self-inflicted ambition to produce a budget surplus by 2019-20.
“That achievement now seems likely only through further spending cuts and higher taxes, with the £48.4 billion a year given as tax relief on pensions a tempting target.”
Nicola Plant, a partner at law firm Thomson Snell & Passmore, based in Tunbridge Wells and Dartford, said: “After much speculation it looks as though further changes to tax relief on pensions have been shelved for the time being.
“Nevertheless, the Chancellor could still reduce the lifetime and annual allowances for pension contributions, or restrict salary sacrifice schemes, which currently avoid national insurance contributions and costs the Chancellor billions each year.”
Accountancy firm RSM, which has offices in Tunbridge Wells, warned Mr Osborne may be looking at other options for balancing the books.
Paul Hodge, tax partner at RSM in Kent, said: “One area we’ll be keeping a particularly close eye on is the development of the government’s plans for personal digital tax accounts, announced in last year’s March budget.
“This will impose an obligation for individuals to file up-to-date information on their income with the taxman every three months.
“While attention has so far focused on taxpayers’ filing obligations, the changes could also be a cover for introducing in-year collection of tax payable – essentially bringing forward payments which would usually be payable in the year ahead.
“These changes could have a significant impact – particularly on the self-employed.”
Meanwhile, Swale Heating has urged the Chancellor to give priority to energy saving home improvements in the budget.
“Our industry has been campaigning for years to get the Government to reduce the VAT rate on high-efficiency boilers,” said the Sittingbourne firm’s managing director David Mathieson.
“It’s morally wrong to keep the rate at 20% when other energy-saving products such as insulation, heat pumps and solar panels attract just a 5% rate.
“The Government could make a significant step towards driving a lower carbon culture and reduce gas usage quickly, cheaply and with minimal administration costs simply by cutting the VAT rate during the budget.
“Not only would this make a new boiler far more affordable for many families, it would also discourage them from using cheap, illegal fitters to save money.”
Elsewhere, the managing director of Kent airline LyddAir has called for a reduction of air passenger duty.
Jonathan Gordon, the boss of Atlantic Bridge Aviation Group, based at Lydd, said he was unhappy it costs £26 per passenger on domestic sectors, after the Chancellor hinted about rises.
He said: “I’d like to see it reduced or scrapped to give the economy a boost and allow the UK to be more competitive.
“We also need more stringent methods put in place for collecting air passenger duty from foreign operators. According to some reports, more than 25% of foreign operators are avoiding it.”
Crowe Clark Whitehill, the auditors with offices in Maidstone and Tunbridge Wells, are calling on the Chancellor to send a positive message to the property industry after a number of tax changes.
In recent years the Chancellor has introduced capital gains tax for certain non-residents, put restrictions on interest deductions for residential landlords and increased stamp duty on second homes.
Crowe Clark Whitehill director of taxation Simon Crookston said: “Over recent years we have seen a number of major changes to the tax regime for the property industry.
“There is the real danger that further changes could dissuade UK and overseas developers and property companies from investing beyond the commercial hotspots of London.”