Three in 10 Brits do not know about Insurance Premium Tax, research finds

Calls have been made to chop a ‘hidden’ tax which is estimated to price the general public and companies as a lot as £8 billion yearly.

Insurance tax provides an additional 12% on to most insurance coverage insurance policies – which suggests a median of £67 is added to premiums for automobile insurance coverage.

This tax shoots as much as greater than £100 for households with a automobile when dwelling insurance coverage is added.

It comes after analysis of two,000 adults with insurance coverage discovered 31% do not know Insurance Premium Tax (IPT) even existed, whereas one other 36% solely have somewhat information about it.

And half are unaware about precisely how a lot will get added to their coverage price due to this tax.

Mervyn Skeet, director of basic insurance coverage coverage at The Association of British Insurers, which has launched a marketing campaign calling on the Chancellor to chop the tax levied on insurance coverage, stated: “It is high time we unmask this tax which penalises people and businesses for being responsible.

“This tax hits the poorest hardest because they normally spend more on insurance, such as home and motor cover, as a proportion of their income.

“Such a move would not only provide relief to hardworking families and businesses but also foster economic resilience.”

The research additionally discovered 49% of these polled have turn out to be extra aware about how a lot they’re spending on insurance coverage because the begin of the cost-of-living disaster.

As a end result, 58% have lowered cowl or modified to a less expensive supplier throughout the final 12 months.

While 26% opted for a supplier they’d by no means heard of as a result of they needed to save cash and 21% eliminated extra extras they’d beforehand included.

Now, 36% are apprehensive they won’t have the suitable stage of canopy within the occasion of an emergency.

Consequently, simply 6% of these polled, through OnePoll, who’ve taken out insurance coverage would oppose a reduce on this taxation.

Nearly seven in 10 (68%) really feel individuals are being penalised for being accountable and getting insurance coverage, whereas 63% are of the idea that taxing on important objects ought to be minimal.

As a end result, the Association of British Insurers marketing campaign has seen Plunge Creations, the costume makers of ITV’s The Masked Singer, create Snippy, a large pair of scissors unmasking this ‘hidden’ tax forward of the finances.

Mervyn Skeet added: “Since its introduction, Insurance Premium Tax has increased more rapidly than the tax rate applied to alcohol and gambling. Today we call on the Chancellor to use next week’s Spring budget to cut the standard insurance premium tax rate.

“It penalises people for being responsible and a cut will help hard working households and businesses offset escalating costs and protect their families and livelihoods against sudden financial shocks.

“There has never been a better time for the government to show its support to the millions of homeowners and businesses who do the right thing by buying insurance.”