Drivers unaware of insurance premium tax rise, poll finds

Drivers unaware of insurance premium tax rise, poll finds

Most motorists are unaware that a rise in Insurance Premium Tax (IPT) next week is set to add an average £12.80 to their yearly car insurance bill, according to the RAC.

With car insurance costs accelerating at their fastest since 2008, the rise means that Britain's 30 million motorists will face typical bills of £367.

The industry-wide increase from the current 6% to 9.5% will take place on November 1 and represent a £386 million hike that will push drivers' insurance tax payments past the £1 billion mark.

Motorists contributed around 20% of the £3bn collected last year for IPT, which forms part of the £40 billion taxes the Government receives from driving taxation each year.

The RAC warns that 80% of motorists surveyed for its poll knew nothing of the rise, while it says young motorists are likely to be hit hard.

A young driver no older than 25 paying a typical £810 for annual car insurance will have to pay an extra £28 from Sunday because of the IPT increase.

For motorists aged between 18 and 20 currently paying an average of £972 per year, the change will add an extra £34 to their insurance bill, bringing it to £1,006.

In the wake of the new rise, the RAC recommends new "black box" vehicle insurance deals, which allow policies to be calculated according to an individual driver's ability behind the wheel.

The motoring organisation estimates that the average motorist will pay a typical £100 a month in motoring taxation from Sunday.

Mark Godfrey, insurance director for the RAC, says: "Insurance is - rightly - mandatory for anyone getting behind the wheel.

"The 3.5% hike in IPT is another stealth tax like fuel duty that has unreasonably added to the already considerable contribution made to the Treasury by motorists.

"With insurance premiums currently going up faster than they have in the last five years, it's sadly going to be a double whammy of bad news for the motorist.

"What's more, these changes significantly raise the bar for anyone wanting to start driving for the first time.

"Young drivers tell us that the cost of insurance is the biggest barrier to them owning and running a car after passing their test.

"Sixty-two per cent of young drivers surveyed by the RAC felt this was the case as opposed to 22% who felt it was buying a car and 12% who cited day-to-day running costs."

Mr Godfrey went on: "Even though the IPT hike is being forced on motorists, those starting their driving careers can have some influence over their future premiums by choosing a black box-based insurance policy.

"This uses telematics technology to understand how a driver behaves, with the potential to reward them with lower premiums."

Chancellor George Osborne revealed the rise in IPT tax in his July budget.

Copyright Press Association 2015