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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 weeks 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 before 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 EIC Insurance Services Limited on 01442 286910 or info@eicinsurance.co.uk and we’ll be happy to help.