Insurance premium tax (IPT) will rise yet again tomorrow, from 10% to 12%, adding about £200 a year to the bills of someone with a car, home, pet and private medical policy, according to the Association of British Insurers (ABI).
IPT has been increased three times in the past two years. In October last year, it rose from 9.5% to 10%.
What is IPT levied on?
IPT, introduced in 1994 at 2.5%, is a tax added to the premiums for most types of policy. It is passed on to consumers by insurance companies.
The standard rate applies to buildings, contents, car, pet and medical insurance. A 20% rate applies to travel and home appliance insurance and some types of vehicle policy. The higher rate will not change. There are some exemptions from IPT, such as life insurance.
Who is the biggest loser?
Motorists. The tax hike is likely to increase the number of uninsured drivers, of which there are now about 1m, according to the Motor Insurers’ Bureau (MIB). Uninsured and hit-and-run drivers kill 120 people a year and injure 29,000, the cost of which is ultimately borne by those who buy cover.
See the full article here: https://www.thetimes.co.uk/edition/money/growing-pain-of-insurance-tax-sbc5bclq3