Consumers in the dark over imminent tax hike
The standard rate of insurance premium tax (IPT) will go up from 6% to 9.5% from November, but a survey found that 42% of Brits had never heard of the measure, which was announced during the summer Budget.
Although IPT is levied on insurance companies, the worry is the tax rise will be passed onto consumers through higher premiums.
Worryingly, more than half – 53% – of people aged 16-24 had not heard of the IPT rise even though young drivers who pay higher premiums are expected to be hit hardest by the tax increase.
Some are expected to see their car insurance bills rise by £50 or more a year, according to the study by UNA, the organisation owned by 12 of the UK’s largest regional insurance brokers.
Experts have warned that the IPT hike could push up the number of uninsured drivers on Britain’s roads.
The insurance sector previously estimated the IPT increase would also add between £10 to £12 to the average buildings and contents policy.
A quarter of consumers (25%) in London claim they are already buying less protection as a result of the IPT rise, the study found.
Tim Ryan, UNA executive chairman, said: “The primary concern with the insurance premium tax rise is that it will now cause a number of consumers to forgo buying insurance, which increases their personal risks, and in the case of motor insurance could mean a rise in illegal drivers. It is certainly a concern that young people remain completely unaware of what’s coming next month. Therefore, these are very worrying statistics.”