What the insurance tax increase means for you
On the 1st of June this year, 2017, the tax that the Government applies to most types of insurance policies, such as for cars and homes, is increasing by 2%.
Insurance Premium Tax (IPT), as the levy is known, has risen quickly in recent years as it’s a relatively easy way for the Government to raise extra revenue.
But since 2015 the rise has been super-charged, and the latest increase to 12% means IPT will have doubled in just two years. In the case of drivers, some experts fear it could lead to many more driving illegally without cover.
What types of insurance is IPT increasing for?
Many of the most common types of insurance cover will be affected, namely: home insurance, car insurance, breakdown cover, health insurance and pet insurance.
Additionally, it will apply to additional insurance costs, such as paying for increased cover during the term of a policy and administrative charges.
Some insurance, such as travel and some types of motor insurance, will be unaffected however as the tax is already levied at the higher 20% rate.
How much more will I pay?
How much more your cover will cost is relatively simple to work out. If your home insurance costs £300 excluding tax for, say, the next 12 months, then the increase in IPT means the total you pay will go up from £330 to £336.
Put simply, the greater the cost of your cover, the greater the increase in the additional tax cost.
So, for example, those who pay a lot to insure a car, or own a home that is expensive to cover, or pay a great deal for health insurance, will be hit the hardest.
How to fight the increase
The best way to mitigate the increase in IPT is, as with most insurance costs, to shop around and compare deals.
There are plenty of online tools to help you, or, you if you don’t feel confident enough or have the spare time, get in touch with an independent insurance broker which will do the leg work for you.
Remember that many insurers tend to offer the best rates and deals to new customers in an attempt to bank new business, rather than reward you for sticking with them for another year!
If your home is your haven, you’ll want it to have the best protection. Compare quotes from our range of handpicked insurers and tailor a policy to suit you. For more information, you can call our experts on 0330 0600 600 or visit www.policyexpert.co.uk/contact for more ways to reach us.
Published 4 May 2017