Following this week’s Autumn Budget, presented by the Chancellor of the Exchequer, motorists will no doubt be pleased to have heard that there has not been a further increase in the Insurance Premium Tax (IPT). The insurance industry is no doubt equally as pleased about this as, had this tax been increased, it would have meant the likes of motor insurance premiums going up once again.
Drivers have had to put up with rising car insurance premiums in the last 18 months or so caused by a number of things as previously covered on this website. For instance, there has been a large rise in claims being made for whiplash injuries resulting in significant sums being paid out by insurers.
Insurance Premium Tax was first introduced on the 1st October 1994 when the rate was 2.5%. On the 1st April 1997 the standard rate of IPT was raised to 4% and was again increased on the 1st July 1999 when it rose to 5%. It remained at that level for many years until the 4th January 2011 when it rose by another 1% to 6%. On the 1st November 2015 the rate increased significantly to 9.5% and rose once more on the 1st October 2016 hitting a double figure of 10%. On the 1st June of this year the rate rose yet again – this time to 12%.
When you consider how much motorists are, on average, paying for their car insurance these days that rate of 12% is adding a considerable amount of money to the cost of insuring a motor vehicle. It is to be hoped that we do not see a further increase in this tax in the not too distant future.
So, what can motorists do? Well, they cannot change the above rate of tax. However, if you are looking to renew your car insurance, you should seriously consider seeing if you can get a better deal on your cover whether that is by speaking to your existing insurer when you receive your renewal notice to see if they can improve on the premium quoted or to shop around and see if a competitor can offer you a cheaper price for the level of cover you require. If the later applies then you will be pleased to read that it is relatively straightforward to be able to switch your cover from one insurer to another.