Insurance premium tax tipped for Budget increase

Wed, 16 Jun 2010

Car insurance premiums could rise in the wake of next week's Emergency Budget, it has been suggested.

According to Moneywise, experts have predicted that new chancellor George Osborne will announce an increase in the rate of insurance premium tax (IPT) in the House of Commons on June 22nd.

At present, there are two rates of IPT, with travel cover and some vehicles and domestic appliances subjected to a 17.5 per cent levy and a standard rate of five per cent added to all other policies.

However, Michael Payne, general secretary of the Association of Medical Insurance Intermediaries, believes IPT could soon be readjusted to bring it in line with VAT.

"The danger is that as in a lot of European countries, IPT will be raised to the same level as VAT," he told the news provider.

"So the ballpark figure is it going up to 17.5 per cent."

With Mr Osborne also widely tipped to increase VAT to 20 per cent, car insurance customers could soon see themselves having to pay more for their policy.
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