From 1 June 2017, most buyers of insurance policies will see the higher 12% rate added to their premium.
Since IPT was introduced in 1994 at 2.5% it has been steadily increased by successive chancellors. IPT has been hiked three times in the past 18 months: the latest rise – of 0.5%, which took the rate to 10% – came into force just last month, on 1 October.
In 2010 the rate was just 5%.
Car drivers are likely to feel the worst of the tax hike. Next June’s increase will add around £10 a year to the average car insurance premium, said the AA. Car insurance premiums will have an increase – up 16% to an average £586 – as insurers have sought to pass on higher claims costs.
Amanda Blanc, group CEO of one of the UK biggest insurers AXA, said the hike represented an unwarranted attack on millions of people simply looking to protect themselves.
“This is a classic case of the government giving with one hand, in the form of whiplash reforms, and taking with another,” she said. “The affordability of insurance is being fundamentally threatened. The country is already underinsured and ever rising insurance taxation could have the unintended consequence of making this situation even worse.”
The rise of IPT going to cause businesses and individuals to decide that cover is simply too expensive and that they may as well go without Insurance?
Business and Personal Lines clients alike have condemned the increase with many arguing that feel they are being punished for wanting to protect their earnings, their property, their workforces and business. Will this increase lead to more uninsured drivers?
Is the Treasury just looking at it’s income potential and expecting consumers and insurers to absorb the costs rather than looking to support all of the good work to reduce the number of people without insurance?
Source – The Guardian Newspaper 23/11/16