Young Drivers to be hit hardest by IPT increase - £40 bill increase as tax changes take effect on 1 November
Tax hike to leave consumers with a £1.8 billion bill increase across insurance products – the equivalent of £68 per household
The Chancellor’s 3.5% increase in Insurance Premium Tax, coming into effect on 1 November, is set to hit young drivers to the tune of over £40 per driver, per year. Young drivers already pay over 160% more for their car insurance than the average premium for age groups over 25.
comparethemarket.com also calculates that the 3.5% rise in IPT will hit consumers with an extra £68 a year, on average, across all insurance products affected by the tax.
The tax hike is set to have an impact across a wide range of products:
- On average, a motorist over 25 will pay £15 more per year (some £25 less than the average increase to a driver under 25)
- Home insurance will see an average rise of £4.30 across both buildings and contents insurance.
- Motorbike owners are set to face an additional £8.50 on their annual insurance bill, on average
- Van drivers face a £16 hike, to their motor insurance bills, on average
Simon McCulloch, Director of Insurance, comparethemarket.com: “According to our calculations, consumers’ wallets are set to feel about £1.8 billion lighter as a result of the Insurance Premium Tax rise taking effect this Sunday. There will be a disproportionately high impact on various groups of people, depending on what they need to insure and their risk profile – but the clearest example is young drivers. With their motor premiums already at hugely expensive levels, the danger is that it is becoming unaffordable for many young people to run a car and an extra £40 a year – which for many people would be about a month’s worth of petrol or would cover their MOT – will be a bitter pill to swallow.”