Insurance Premium Tax has risen for the third time in two years taking the rate to 12% from June 2017. IPT was first increased to 9.5% from 6% from November 2015 and to 10% from October 2016.
Consumer Intelligence estimates the IPT rise will add around £15 a year to the average motor insurance premium of £788 which has already increased 13.5% in a year. Younger drivers will suffer the most with average premiums for under-25s rising by £35 on their current £1,831 premium.
Homeowners can expect to see prices rise by around £2.50 a year on average from the current £123 annual cost of home insurance premiums.
Ian Hughes, chief executive of Consumer Intelligence, said:
“In one fell swoop the Chancellor has removed much of the supposed financial benefit to drivers from the whiplash compensation reforms announced last week. Young drivers will effectively see any reductions they had been looking forward to wiped out as a two point increase on today's average premiums of £1,831 equates to £35. Once again every homeowner and driver will have to pay more to protect what matters most to them".
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