As part of the autumn statement, Chancellor Philip Hammond announced that Britain’s Insurance Premium Tax (IPT) is expected to rise by 2% to a new high of 12%.
Following rises in October 2015 to 9.5% and a subsequent rise in October 2016 to 10%, the new tax will take effect from June 2017, representing the third rise in IPT in less than two years.
First introduced in 1994, IPT is a tax on general insurance premiums and will significantly affect both commercial and personal insurance policies such as combined policies, motor fleet, and household.
According to research carried out by the Mirror Money, this latest announcement will add an estimated £51 to average household bills, whilst Consumer Intelligence estimates the average motor insurance premium of £788 would see an increase of £15 per year.
The British Brokers’ Association (BIBA) has called the IPT increase ‘outrageous,’ having lobbied the government for a freeze. In a statement the organisation said: “This comes at a time when 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.”
John Noone, Managing Director of H&H Insurance Brokers commented: “Any increase in tax is unwelcome but especially when it has already experienced increments in recent years.
“The IPT rate will have doubled within two years by the time it comes in next year, and unfortunately, I think we may well see this pattern continuing in years to come.”