You are here: Home - Insurance - News -

Summer Budget: Households and motorists face higher insurance premiums

Written by:
Millions of consumers could see their insurance premiums rise thanks to an increase in the amount of tax insurers have to pay.

Chancellor George Osborne announced today that the standard rate of insurance premium tax (IPT) will go up from 6% to 9.5% from November 2015.

Although IPT is levied on insurance companies, the worry is the tax rise will be passed onto consumers through higher premiums.

The British Insurance Brokers’ Association (BIBA) predicts that 20.1 million households with contents insurance, 19.6 million with motor insurance and 17 million with buildings insurance will be affected by the tax hike.

“The Government has been working with the industry to reduce the cost of insurance for consumers – including a summit chaired by the Prime Minister. It therefore seems counterintuitive to be taking measures which will add to the cost – effectively taxing protection,” said BIBA CEO, Steve White.

British households and motorists have been benefitting from declining costs for home and car insurance premiums over the last few years.

While consumers across the board will be impacted by the changes to IPT, young drivers could be hit particularly hard.

Rod Jones, insurance expert at, said: “Raising premium insurance tax is another kick in the teeth for young drivers, who are already struggling to pay sky high premiums without the advantage of a no claims discount.

“Drivers aged between 17 and 22 could now find themselves paying an average premium of £1,247 a year – an increase of almost £40 – before any other motoring bills have been paid. It’s high time a flat rate tax system was introduced,” said the taxation paid on home and car insurance premiums will rocket by almost 60% from November, adding £35 to insurance bills for the average two car family.

The government is set to net an additional £1.75bn from the IPT increase, according to KPMG.




There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

It’s time to get your finances in shape, and moving your cash savings to a higher paying deal is a good plac...

Everything you need to know about being furloughed

Few people had heard of ‘furlough’ before March 2020, but the coronavirus pandemic thrust the idea of bein...

The experts’ guide to sorting out your personal finances in 2021

From opting to ‘low spend’ months to imposing your own ‘cooling-off period’, industry experts reveal t...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week