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Insurance Premium Tax effective this weekend
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
Homeowners, landlords and letting agents alike are being warned to budget around a new tax hike, which comes into effect from this Sunday, November 1st.
Millions of people face seeing their insurance costs rise as a result of the tax changes. As announced in the summer Budget, the standard rate of Insurance Premium Tax-a tax paid every time an insurance policy is purchased in Britain-will rise from 6% to 9.5%.
Increases
The Association of British Insurers is warning that the change will see 4.7 million household policies affected. Any insurance policy taken out after October 31st will be subject to IPT charged at the new rate.
James Dalton, director of general insurance Policy at the Association of British Insurers, said, ‘whether you are a home owner, driver, own a pet or buy medical insurance, millions of people across the country face being hit in the pocket by this rise in Insurance Premium Tax.’[1]
‘Whether it’s a legal requirement or you want to buy extra cover, insurance is a financial safety net, not a luxury,’ he added.[1]
An increase in Insurance Premium Tax is expected to generate an extra £8.1billion for the Treasury by 2021.
Insurance Premium Tax effective this weekend
Switches
Website uSwitch has suggested that people with insurance policies that are set to expire in early November should consider moving to a fresh deal before the conclusion of their existing one. This could potentially lead to a cheaper outcome in the long run.
Someone looking to move policies should weigh up if there will be any exit fees and the prospect of not getting money back on the remaining days of cover left to run on the policy. In addition, there could be the potential loss of an entire year’s no claims bonus.
However, Kevin Pratt, insurance expert at MoneySuperMarket, said, ‘there’s really nothing people can do to avoid paying the increased Insurance Premium Tax in the future. Even quotations run now for policies that renew next month will show a premium that includes IPT at the higher rate applicable at the point of renewal.’[2]
Dalton added that, ‘while insurance remains one of the most competitive industries in the UK, its affordability can’t be taken for granted.’[2]
‘Further tax increases must be avoided if insurance is to remain accessible for all,’ he concluded.[2]
[1] http://www.thisismoney.co.uk/money/bills/article-3288548/Millions-face-insurance-costs-rise-IPT-hike-effective-Nov-1.html
[2] http://www.express.co.uk/finance/personalfinance/614784/Act-now-to-beat-next-week-s-insurance-price-hikes
