While the AA recently advised against an increase in Insurance Premium Tax (IPT) the Chancellor has now confirmed the hike, taking the rate from 9.5% to 10% on Saturday. Being applied to most general insurance policies bought in the UK the increase will have the biggest bearing on those buying home insurance, motorists, private medical insurance customers and pet owners.
While a small margin of 0.5% this will still boast an impact for many policy-holders, especially those shopping for car insurance in the near future.
However, officials have warned that young motorists looking for insurance will take the biggest blow, with the announcement in the Budget being the second increase of the year. In October 2015 IPT stood at just 6.5%, encouraging a community of people voice their opinions on the subject, progressing many conflicting viewpoints.
ABI director general Huw Evans said: “Insuring your home or business, your health and your possessions is the wise thing to do, taking responsibility for protecting yourself from some of the unexpected events in life. Insuring your car is a legal requirement.
“These two IPT increases are a raid on the responsible, taking advantage of those who already do the most to avoid becoming a burden on the state.
“The Government should be in no doubt that such steep increases in insurance premium tax may eat into the finances of both households and businesses.”
Let us know what you think, should this increase be welcomed? Leave your comments below.