Insurance Premium Tax increase hits riders

money on table close up

Insurance Premium Tax (IPT) jumped to 9.5 per cent yesterday, in line with Chancellor George Osborne’s announcement in the Summer Budget.

The 3.5 per cent rise in IPT means motorists will pay £13 more on average when they renew a Comprehensive policy or hunt for a new policy.

According to Osborne, the tax increase will raise an extra £1.5bn a year by 2017/18 and an estimated £8.1bn by 2021.

The IPT hike also affects home insurance, pet insurance and private medical policies but motorists will be hit hardest by the changes, says the RAC.

RAC Insurance director Mark Godfrey said: “Insurance is – rightly – mandatory for anyone getting behind the wheel. The 3.5% hike in IPT is another stealth tax like fuel duty that has unreasonably added to the already considerable contribution made to the Treasury by motorists.

“With insurance premiums currently going up faster than they have in the last five years, it’s sadly going to be a double whammy of bad news for the motorist.”

Despite the majority of news outlets in the UK only making reference to car insurance, the IPT increase also affects motorbike, scooter and moped insurance policies.

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