Insurance Premium Tax Increase to 12%

The new rate was announced by Chancellor of the Exchequer Phillip Hammond in his

Autumn Statement.

Amid reports that car insurance premiums have seen an 8% increase in six months, the new

rate of insurance premium tax is only a week away from coming into force.

Taking effect from the 1st June, the new figure of 12% is estimated to add £51 to the

average household’s bills, with an increase on car insurance of £15 a year, according to

research from Mirror Money.

However, the government insists that when offset with a crackdown on whiplash claims and

a freeze in fuel duty, drivers may see a decrease in their motoring outgoings, despite the

change in IPT.

 

IPT – when it will affect you

 

Policies arranged after 1st June

 Unlike previous increases – of which there have already been two in recent times – there

will be no concessionary period, meaning new policies and renewals arranged after the 1st

June will automatically come with the higher 12% rate. The rate will also apply to any midterm

adjustments, which may be pertinent to businesses which have seen a change in

circumstances, such as an expansion or relocation.

 

Policies arranged after 1st June

 It won’t apply, however, to policies arranged or renewed before the 1st June. Any mid-term

adjustments or cancellations will also follow the same rate as that which the policy was

arranged with – so 10% if it was purchased before 1st June.

If you’re unsure as to what level of IPT will apply to your policy and how much this will

amount to, speak to us at Opus Risk Solutions and we will be happy to help.