Increases in IPT 2016

October 2016 saw a further increase in Insurance Premium Tax to 10%, up from 9.5% the previous year. This increase has been earmarked to pay for an extra £700 million in flood defence and resilience funding over the next few years, as this has become an increasing issue in the UK in the last decade. 

What is Insurance Premium Tax?

IPT is a tax on insurance premiums, including car, home and pet (although it doesn’t apply to life insurance) and is something the majority of us can’t avoid. The latest increase is relatively modest compared to the rise on 1 November 2015 from 6% to 9.5%. This was the largest single increase in IPT since it was introduced in 1994 and seems to have had an impact on insurance premiums over the past year.

What will this affect?

Many insurance policies, including any car or home insurance policy, may increase in line with the tax increase. While it only makes up a small part of your overall premium, our latest Premium Drivers Index has found that car owners in particular are really feeling the pinch, with costs already rising according to the ABI due to a number of factors including staged car accidents, rising repair bills and insurance scams. This tax increase may cause a further rise in insurance premiums for many of you.

Saving money

But it’s not all doom and gloom. Our index found that you could save up to £118 by shopping around and comparing car insurance premiums. And you could save on your home and pet insurance too, just by filling in a few details. So don’t give in to rising insurance premiums – start comparing now and see what you could save!

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