Corporation tax 'could force insurers out of the UK'

Date: 26th January 2010

Insurance firms pay the fourth highest amount of corporation tax in the UK contributing £8.2 billion to the economy, according to the Association of British Insurers (ABI).

The amount comes despite a recorded 8.4 per cent fall from the 2007-08 total.

According to the ABI, unless a more "competitive and business friendly environment" is put in place, a number of firms could leave the UK.

Peter Vipond, director of financial regulation and taxation at the ABI, said: "The real danger for UK plc is insurers deciding to locate away from the UK.

"This is not just about who offers the lowest tax rate, though that remains an important factor."

Mr Vipond suggested the UK could benefit from adopting the "friendly attitude to business" which is demonstrated by places such as the Holland, Ireland and Hong Kong.

The ABI report also claimed that the average insurance sector salary of £42,000 sees insurers pay £18,667 more in employment taxes when compared to the average wage of £25,000 per year.