In the Autumn 2016 Budget the UK Government elected to raise the lower rate of insurance premium tax for policies issued or renewed from 1st June 2017 to 12%. Since 2015 insurance premium tax has doubled and has contributed to a rise in household insurance costs.
Insurance Premium Tax generates over £7bn for the treasury of which, according to the British Insurance Brokers Association little of which contributes to improvements in insurance risks. Following the change to the Discount Rate earlier this year (The Discount Rate – How will it affect you?) it was hoped the Government would not continue with this rise in tax that will increase the burden on UK households.
A higher rate of Insurance Premium Tax at 20% remains unchanged and applies to travel insurance policies.
For adjustments to policies issued prior to 1st June 2017 please refer to your respective insurer or insurance provider.