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How the government can save motorists money

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The AA has called on the government to cut insurance premium tax (IPT) and freeze fuel duty in this week’s Autumn Statement.

The motoring firm said the moves would help hard-pressed consumers.

The rate of IPT went up from 6% to 9.5% in November 2015, and then another 0.5% on 1 October 2016 taking it to 10%.

IPT affects car, home, pet, private medical insurance and most commercial insurances.

There are concerns the government could add a further 2% to IPT, taking the indirect ‘stealth’ tax to 12%.

“Another 2% would represent a doubling of this extremely unpopular form of taxation on something that drivers have no choice but to pay, while it penalises those who take responsibility for their belongings and property by insuring them,” said Michael Lloyd, the AA’s director of insurance.

“There are around one million uninsured cars on Britain’s roads and this isn’t going to come down unless car insurance becomes more affordable – and that includes tax. I’m calling on the chancellor to think again and, rather, reduce the burden by 2%.”

The AA is also calling on the chancellor to freeze fuel duty once again.

If the duty is increased by just 1% it would add around 0.6p to the cost of a litre of fuel at current prices, the firm said.

“A car typically fills up twice a month, 50 litres a go. That makes 1,200 litres a year. A fuel duty increase, with VAT (0.7p), would add £8.40 to the average car’s annual fuel bill, or £16.80 for a two-car family,” said Lloyd.

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