1 November, 2015
Insurance Premium Tax Increases from 6% to 9.5%
It was announced in the most recent budget that insurance premium tax would increase from 6% to 9.5% as from 1st November 2015, the biggest single increase since the tax was introduced. Millions of British households and businesses will be hit with higher insurance costs following the “stealth” tax rise. Defending the increase, Mr Osborne said that it would affect just one in five premiums, as other types of insurance such as life and critical illness cover are not affected. He added that the cost of household insurance policies is falling and Britain’s insurance premium tax is well below the rates in many other countries.
The British Insurance Brokers Association’s (BIBA) CEO Steve White said “We are extremely disappointed in this rise in Insurance Premium Tax and will mean insurance will become more expensive for the public as a result. Those hit by this stealth tax will include the 20.1 million households with contents insurance; 19.6 million with motor insurance and 17 million with buildings insurance.”
The Association of British Insurers (ABI) estimates that the new tax rate will add £9.48 to the average annual household insurance policy and £12.25 to the average annual comprehensive motor policy. The Government has estimated that the increase will raise an additional £1.5bn a year for the Treasury.