After the government’s latest tax hike insurers have warned that premiums will rise again.
According to the Association of British Insurers, the average household’s annual general insurance bill will increase by an extra £47 – based on a family with a young driver and pets in the household.
The insurance premium tax (IPT) has increased to 12 per cent from 10 per cent.
In less than two years, the rate of tax paid on most insurance policies has doubled.
The rate was 6 per cent in 2015, before increasing to 9.5 per cent in November that year, and then from 9.5 per cent to 10 per cent in October 2016.
A spokesman for the Treasury was quoted by the BBC as saying: “Insurance Premium Tax is a tax on insurers, not consumers – insurance firms decide whether to pass it on to their customers or not.
“IPT is higher in several European countries, including France and Germany, than it is in the UK.”
The British Insurance Brokers’ Association (BIBA) said that the IPT increase will have an affect on:
- 4 million home owners/renters with contents insurance
- 1 million drivers with motor insurance
- 2 million home owners with mortgage protection
- 9 million people with private medical insurance
- 4 million pet owners
Steve White, chief executive of the BIBA, said: “This rapid increase is unprecedented – between 1997 and 2015, a period of 18 years, there were only two rate rises, taking the rate from 4% to 6%.”