BUDGET 2016: Secret stealth tax to hit millions of drivers?

Almost three quarters (72%) of drivers are unaware that they have to pay tax for breakdown cover.  They will view any reported increase in Insurance Premium Tax in Wednesday’s Budget as a stealth tax, according to the AA.

Whilst much attention has been made about predicted hikes in Insurance Premium Tax which will affect motor and home insurance policies, little thought has been given to the millions of drivers who could take a double hit as their breakdown cover is also hiked.

In an AA Populus survey of almost 30,000 drivers when the last IPT increase was announced:

- Only 28% knew IPT is levied on breakdown cover. 72% didn’t know this.

- 71% knew IPT is levied on car and home insurance 

- 87% felt more expensive vehicle insurance encourages people to drive uninsured

- 87% felt the AA should campaign against this rise

- 87% felt increasing the cost of essential insurance is not fair

- 89% didn’t think an increase in IPT is justified.

Edmund King, AA president, said: “Whilst there has been much speculation about whether the Chancellor will increase fuel duty on Wednesday it appears that drivers could be hit even harder by increased stealth taxes on breakdown cover and car insurance.

“Almost three quarters of drivers don’t realise that breakdown cover is regarded as insurance and is taxed in this way. It is completely unreasonable that the Chancellor sees motorists as an easy target by hiking taxes for drivers who are doing the right thing to protect themselves and their families in the event of a breakdown.

“If these hikes go ahead we will make it clear to every AA member just how much they are paying the Government for this stealth tax.”