Insurers Threaten to Leave the UK

September 16, 2009 Taxation in EUTaxation in UK  No comments

The Association of British Insurers has warned that unless taxation is made more competitive in the UK, insurance providers and their executives will shift their business offshore.

The Association of British Insurers (ABI) called on the British government to address aspects of the taxation system in order to quell concerns of the insurance industry. In a paper titled “UK Competitiveness: the way forward for insurance”, published on the 15th of September, the AIB released results of a survey conducted on insurance providers and their managers, along with a list of proposals of changes in British taxation.

According to the ABI publication, 81% of UK based insurers believe that if the British taxation system stays the same as it is now the number of insurance providers resident in the UK will drop within 5 years. Of all the senior managers surveyed, 61% claim to be either slightly or seriously tempted to move abroad to work, primarily due to the personal taxation system in the UK. Only 5% admitted to not feeling any temptation to relocate. Only 29% of those surveyed believed that the UK tax system is at all competitive.

To address these figures, the ABI has created a list of proposals to change the British taxation system. Key alterations include simplifying or clarifying the corporate taxation system to give it a higher degree of predictability, allowing businesses the ability to better plan their decisions in regards to their subsequent tax liability. Corporate tax exemptions have been suggested for firms with branches offshore, as encouragement for firms to maintain their headquarters in the UK. Personal taxes and tax relief on pension payments are also addressed in the proposals, citing the link between personal tax competitiveness and the desire for executives to work within the United Kingdom.

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