British Chancellor of the Exchequer Gordon Brown has announced a freeze on insurance premium taxes, holding them at 5%. As the Association of British Insurers (ABI) puts it, the tax has been generating substantial amounts of tax for the UK Government “and it would have been perverse for the chancellor to raise the rate”.

Not that the UK tax could compare with the world record rates set by Australia’s states and territories. The UK rate is 5%, with a higher rate of 17.5% for travel insurance and some insurance for vehicles and domestic/electrical appliances.

The tax of was introduced in 1994, and until 1997 it was pegged at 2.5%. It rose to 4% and then, in 1999, to 5%. It was expected to rise again this year.

ABI Director-General Mary Francis said the freeze is welcome, “but we agree with the growing number of calls for a reduction in future”.

In another insurance-related move, Mr Brown has also devised a tax arrangement that will make it easier for unlimited liability investors in Lloyd’s – the Names – to convert to limited liability. Under the new arrangement, the remaining 2048 Names will be able to receive the same tax treatment as the self-employed.