Chancellor Philip Hammond announces further tax increases.
Experts estimate UK household expenses could increase by £51 after announcements made in the Autumn Statement. Home buildings, contents and motor insurance bills are all set to rise as a result of yet another increase in tax.
Britain’s Insurance Premium Tax (IPT) is due to rise by 2% to a new high of 12%, Chancellor of the Exchequer Phillip Hammond has announced in the Autumn Statement.
Taking effect from June 2017, this will represent the third increase in IPT in less than two years.
In July 2015 it increased to 9.5%, and in March 2016 it increased to 10%. Prior to these increases, IPT stood at 6% so this increase means it has doubled in under two years.
First introduced in 1994, IPT is a tax on general insurance premiums such as home insurance, car insurance and travel insurance.
Insurance executives have criticised these tax rises, as they have contributed to a sharp increase, particularly in motor insurance premiums. Usually passed directly to policyholders, the tax is added as a percentage on top of the premium - so if you live in an area where insurance premiums are high you will pay more in tax.
According to research carried out by Mirror Money, this latest rise will add an estimated £51 to average household bills, whilst Consumer Intelligence estimates the average motor insurance premium of £788 would increase by £15 per year.
The government believes that its recently announced plans to crack down on the current “unacceptably high” number of whiplash claim payouts, alongside a freeze in fuel duty which was announced in the Autumn Statement, will save drivers money despite the IPT increase. To find out more, read our blog about changes to whiplash claims.
However the British Insurance Brokers’ Association (BIBA) has called the IPT increase “outrageous”, having lobbied the government for a freeze.
In a statement the organisation said: "This increase comes at a time when both motor and home insurance premiums are rising and our fear is that many of those who most need it will avoid taking up insurance and be unable to afford the protection they need."
To find out if a broker is able to get you the best cover and even bring your insurance bills down, call Fiveways Insurance today on 01952 812380 or email us firstname.lastname@example.org.