On 01 October, the Insurance Premium Tax (IPT) rises from 9.5 per cent to 10 per cent, meaning insurance policies will be more expensive for tens of millions of people.
IPT applies to the majority of general insurance policies in the UK that are purchased, and while the 0.5 per cent hike is certainly not as sharp as the previous one (rising from 6 per cent to 9.5 per cent in November 2015), it is still very unwelcome news for many Brits.
The Association of British Insurers (ABI) predicts that the average comprehensive car insurance premium will cost £16 more, while there is expected to be a £12 increase to the average pet insurance policy, and the average combined building and contents insurance policy is predicted to cost £12.50 more.
People paying the highest prices for their insurance policies, such as young drivers, will especially feel the burden.
“Insuring your home or business, your health and your possessions is the wise thing to do, taking responsibility for protecting yourself from some of the unexpected events in life. Insuring your car is a legal requirement,” said Huw Evans, director general of the ABI.
“These two IPT increases are a raid on the responsible, taking advantage of those who already do the most to avoid becoming a burden on the state. The government should be in no doubt that such steep increases in insurance premium tax may eat into the finances of both households and businesses.”
The government has said that the increase in funds gained through the tax will be used for flood defence maintenance, as well as to build new defences.