Insurance tax hike hits millions of policyholders

Millions of homeowners and businesses have been hammered by another tax hike as Insurance Premium Tax (IPT) climbs to 12%. The changes came into effect at the beginning of June and mean that the tax charged on most insurance products has doubled from 6% in 2015 and is now estimated to net the treasury £7billion a year.

The Association of British Insurers (ABI) has calculated that the new tax rate could add nearly £50 to the average family insurance bill and that IPT now costs households an extra £238 a year. Businesses have also been hit and can expect to pay an additional £300 per annum for commercial insurance policies.

Speaking about the tax increase James Dalton of the ABI said “With a doubling of IPT in just under two years it is time to call a halt to this raid on the responsible. This tax penalises hard working families, as well as businesses, who have done the right thing by taking out insurance to protect against many of life’s uncertainties. This latest hike must be the last. The next government must freeze this tax, to give hard working households and businesses a break.”

Steve White of the British Insurance Brokers’ Association (BIBA) echoed the sentiment saying “Let’s be clear about this; it is a tax on protection and penalises those that take the burden off the state by showing responsibility and prudence. We feel this rise is counter-productive to what Government should be doing and we’re calling for a freeze of the tax for the term of the next Parliament.”

In fact, recent research carried out by BIBA revealed that 90% of brokers believe that a further rise in IPT would lead to customers reducing levels of insurance or not bothering with cover at all.

IPT is charged as a percentage of the overall premium, which means that those who are already paying the most will be hit the hardest, and young drivers are expected to face the biggest increases. The changes are expected to impact 20.4million homeowners and renters with contents cover and 20.1million motorists (as well as: businesses, pet owners and people with private medical insurance).

In these tough economic times, it’s more important than ever to make sure you’re getting the right cover at the right price. Quoteline Direct is an independent insurance broker with nearly 50 years’ experience with access to some seriously competitive policies. To find out more about affordable insurance visit Quoteline Direct or Tel: 0161 874 8000 to speak with a member of our team.

 

 

 


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