Households buying car, house and holiday insurance will find premiums rise following the new chancellor announced significant increases to insurance premium tax (IPT).
Currently, people buying general insurance products C including car and home insurance C pay a 5% levy as part of the overall price.
But from 4 January buy they’re going to pay 6% tax. The growth will mean the regular motor insurance buyer will pay 18 a year in tax over a typical 300 premium.
Young drivers who pay more achieable premiums might be hit hardest. A few will see their vehicle insurance bills rise by 15 annually pick up. The growth comes at one time when drivers previously seen their premiums get higher as insurance costs have risen in the last Year.
Those buying holiday insurance, and car or truck and electronic goods warranties C which up to now incurred IPT at 17.5% C can be taxed at 20%. Likewise, tax on gas boiler system health insurance policies sees an expansion to 20%, a typically rise of 4 12 months.
The move, that is widely expected, weren’t badly as feared by the insurance industry, which had predicted there may be a doubling in the general insurance rate to 10% C a move that is going to have raised 2.3bn.
Eric Galbraith, chief executive from the British Insurance Brokers’ Association (Biba), expressed disappointment that your government had chosen to go ahead having an increase which is termed a tax to the prudent C those who buy insurance.
“Biba’s research during the past year established that businesses and consumers were reducing protection plans as a result of the recession, and we’re concerned that increases to insurance premiums as a consequence of IPT can lead to a little more forward underinsurance or perhaps a deficiency of insurance protection. The last thing young people need within a financial crisis is often a higher insurance bill,” he said.
Simon Douglas, director of AA Insurance, which publishes the influential quarterly British Insurance Premium Index, said the rise will not welcomed by people buying home and motor insurance, but is less painful of computer could have been. “I am relieved the fact that increase wasn’t in excess of can it ensures that the chancellor has been hearing our concerns.
“Car insurance costs, especially, are rising immediately as insurers struggle to replenish reserves, depleted by underwriting losses. I feel we will have premium increases as much as 20% this season to your second year running. My greatest concern was that your large boost in IPT would have generated more and more people endeavoring to drive their cars without being insured.”
IPT has been available since 1994 on a one-time fee of 2.5%. It was actually increased on general insurance products to 4% in 1997 in order to 5% couple of years later. In 1997 an additional higher range of 17.5% was included in cover travel, motor and electronic policies.