Holidaymakers will be put off from taking out travel insurance because of the VAT increase, it has been claimed.
According to Peter Hayman, director at P J Hayman and Company, people going on single trip travel breaks in the near future may be deterred from getting an effective annual insurance cover plan by the higher level of VAT. Mr Hayman believes that the Conservative-Liberal Democrat alliance’s decision to increase VAT from 17.5 per cent to 20 per cent, at the beginning of 2011, could be dangerous as it may “deter” holidaymakers from purchasing an essential travel insurance policy prior to leaving home.
He said: “The government will be collecting a 20 per cent tax on all travel insurance premiums. Those most affected by this alteration will be people who have to pay higher premiums due to age, ill health or decide to take a gap year “.
Recent research by sunshine.co.uk revealed that 12 per cent of Britons will consider moving abroad for a lower cost of living following the VAT rise.