New Insurance Tax Could Cost Taxpayers An Extra £100 A Year

Insurance companies are set to pass on the costs of a multi-billion Government tax raid onto families – who could now have to pay an extra £100 on their annual bill for car, pet and home insurance.

The Treasury has been slammed as “disingenuous” and accused of “spin” after it increased a premium tax charged on certain insurance policies.

Insurers have claimed that the increase – part of levies imposed on insurers because they are exempt from VAT – is a “stealth tax on people who do the right thing”.

Although government officials have denied claims that its policy is an attempt to drive up costs for hardworking families, some of the UK’s biggest insurers – including Aviva and RSA – have confirmed that they plan to pass on the costs to customers, who experts say will now see their household insurance bill rise by between £50 and £100 if they have more than one car and insure their buildings and contents.

Young drivers – whose insurance premiums have already rocketed this year – are among the worst affected, with the AA predicting an average premium of £1,228 for anyone under 24

One commentator, MoneySavingsExpert.com’s Martin Lewis, has claimed George Osborne’s department “are not qualified to do their job” if they thought insurers would not pass on the new costs to customers.

He said: “Insurers always try to charge as much as they possibly can.”

Stephen Hester, boss of insurers RSA, warned families that they faced “a big rise” in their premiums and that the new policy was “bad news”.

A new rate of 9 per cent of insurance premium tax (IPT) on car, buildings and contents and pet insurance – up from 6 per cent – will apply from November 1st, with this increasing to 9.5 per cent on March 1 2016.

The tax hike is set to rake in £8.6 billion for the Treasury over the next six years.

Report from Daily Express