On average, teenage drivers could now pay up to £252.60 in tax on their insurance premiums*
Matt Oliver, car insurance spokesperson at Gocompare.com, said: “Just a few months after the last IPT rise was announced, drivers have been stung with another increase by the chancellor today as it was announced that IPT will rise once again, this time to 12%.
“IPT is paid as a percentage of your insurance premium so an increased rate means groups such as young drivers, or older people with medical insurance are likely to be hit the hardest. Ultimately, these are the people who already face the highest premiums, meaning this IPT rise will be felt the most by those who can least afford it.”
Timeline of Insurance Premium Tax**
1 October, 1994
Introduced at 2.5%
1 April, 1997
rises to 4%
1 July, 1999
rises to 5%
4 January, 2011
rises to 6%
1 November, 2015
rises to 9.5%
1 October 2016
rises to 10%
1 June 2017
Rises to 12%
Matt Oliver continued: “Just a month since people started paying the increased level of IPT announced in this year’s budget, they are being hit in the wallet once again by the chancellor. The last hike meant IPT had already risen 66% over the past year and after the June 2017 increase it will have doubled in just over 18 months.
“This increase could be considered as tax on young drivers who will take the brunt of the increase. With the proposed rise, a 17 year old driver could pay as much as £252.60 in tax on their insurance premium*.
“Unfortunately, IPT seems to be a well of easy money for the government to draw from and there’s no getting away from the fact that a rise in IPT will result in higher premiums. However, what people can and should be doing to minimise the impact of this hike is making sure they are regularly shopping around to find the best deal available for their circumstances.”
For more information on Insurance Premium Tax see Gocompare.com’s guide.
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Notes to editors:
*One year’s fully comprehensive car insurance £2,105 based on Gocompare.com’s average cheapest quote for a 17 year old driver, driving a 2015 Ford Fiesta and living in London. 12% = £252.60