Legal expenses insurance tax hike is yet another barrier to justice

18 March 2016

The Bar Council has warned that the Chancellor of the Exchequer's Budget announcement that the Insurance Premium Tax will go up yet again is another barrier for hardworking individuals and families seeking justice. 

With legal expenses insurance subject to the tax, the Bar Council says the move risks pricing those with a valid claim for compensation out of court.   

Chantal-Aimée Doerries QC, Chairman of the Bar, said: "The Chancellor's decision to raise the insurance premium tax on 'before and after the event' (ATE) insurance policies is yet another obstacle to anyone seeking to enter our justice system. The whole point of ATE is to cover the cost of bringing or defending a court case or of legal advice costs. Increasing the tax on these premiums to 10 per cent is a direct attack on the responsible consumer's wallet. 

"This is not a tax on the insurers; it is a tax that the policy holder has to pay directly if they want to protect themselves in a claim. This tax increase should not be taken in isolation. With the Government increasing the fees people have to pay to use our courts for civil claims, anyone would think they are actively pricing hardworking families and individuals up and down the country out of the justice system. 

"There is no legal aid for these types of claims. Legal expenses cover such as this is supposed to help pay for the costs associated with seeking justice. Now, even that will be less affordable. 

"The bottom line is that if you need to use the courts to seek compensation for example an injury that wasn't your fault, or even if you are facing a claim for someone else's injury, you have to pay a high price before you even step into the court room." 


Notes to Editors

Legal expenses insurance is purchased to fund the costs of legal advice and/or the costs of bringing or defending a court case. Legal expenses insurance can be bought: 

  • "before the event" - in case a future legal action has to be fought or defended; or 
  • "after the event" - where the policyholder has already decided to take or defend a legal action and wants to insure against the risk of losing and having to pay the other side's costs. 

The Treasury increased the standard rate of Insurance Premium Tax to 10% in yesterday's Budget following an increase from 6% to 9.5% in November 1 2015. 

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The General Council of the Bar is the Approved Regulator of the Bar of England and Wales. It discharges its regulatory functions through the independent Bar Standards Board