New tax rise will increase insurance costs by £100
A FAMILY with two cars, a pet and medical insurance could see their insurance costs surge by around £100 a year after a tax increase comes into force next weekend, the Association of British Insurers (ABI) is warning.
Millions of people, including motorists, home owners and pet owners face seeing their insurance costs increase.
The standard rate of Insurance Premium Tax (IPT) - the tax paid each time an insurance policy is purchased in the UK - will increase from 6 per cent to 9.5 per cent from November 1, as announced in the summer Budget.
The ABI said the change will affect 7.3 million car policies, 4.7 million household policies, three million pet policies and three million private medical insurance policies.
Any of the affected insurance policies with a start date after October 31 will have IPT charged at the new rate.
The ABI warned that the change is likely to add:
• Nearly £13 to the average comprehensive motor insurance policy
• More than £10 to the average combined building and contents cover
• More than £10 to average pet insurance
• More than £40 to average private medical insurance
James Dalton, director of general insurance policy at the ABI, said: “Millions of people face being hit in the pocket by this rise.”
The increase is expected to bring in an additional £8.1 billion for the Treasury by 2021.