Insurance Premium Tax rates 1994 to 2017
Drivers that obey the law, behave responsibly and insure their vehicles likely face higher premiums following the Insurance Premium Tax hike – the latest of several in recent times – that came into force on June 1st 2017, The Association of British Insurers stated. The liability has increased from 10% to 12% (+2%).
Insurance Premium Tax relates to motor, home, pet, medical and other policies so has a notable impact on family finance and security. It is a “raid on the responsible”, The Association suggested. Further, it has doubled in less than 2 years. See below:
- June 1st 2017: 12%
- October 1st 2016: 10%
- November 1st 2015: 9.5%
- January 4th 2011: 6%
- July 1st 1999: 5%
- April 1st 1997: 4%
- October 1st 1994: 2.5%
Impact on motorists
The Association of British Insurers explained the likely consequence for motorists. Insurance Premium Tax at 12% - rather than 10% - increases the average tax burden for a private car policy to £50 (+£8). Drivers that pay higher premiums pay more tax, of course. A 19 year old in a private vehicle now pays £119 (+£20).
Insurance Premium Tax is not the only liability. Others include fuel duty, value added, excise duty and company car tax. General taxation, therefore, further raises costs for motorists that rely on their vehicles to commute to work, to visit family, and to shop.
Freeze Insurance Premium Tax
The Association's Director of General Insurance Policy, James Dalton, therefore criticised the recent rise that might make travelling prohibitively expensive for some motorists. He revealed:
“With a doubling of Insurance Premium Tax in just under 2 years, it is time to call a halt to this raid on the responsible. The latest hike must be the last. The next Government must freeze this tax to give hard working households and businesses a break”, Dalton added.
The British Insurance Brokers' Association Chief Executive, Steve White, shared the sentiment. He added: "The Chancellor has indicated more rises are possible - so this remains a concern for member brokers' customers who are also experiencing significant premium increases following changes to catastrophic injury awards."
Mr White added: "Let us be clear about this: Insurance Premium Tax is a tax on protection and penalises those that take the burden off the state by showing responsibility, and prudence. We feel this rise is counter-productive to what Government should be doing. We're calling for a freeze on this tax during the next Parliament."