Insurance Premium Tax raised to 10%

This follows a previous rise from 6% to 9.5% which came into effect at the beginning of November last year, meaning the tax itself has risen by more than 66% in less than a year.

The new rate is likely to add over £52.50 to the average private medical insurance policy, according to the ABI compared with this time 12 months ago (taking the impact of both increases into account).

More than £12.50 will be added to the average combined building and contents policy.

The ABI has warned that because Insurance Premium Tax is a tax the Government applies to individual policies, people who have the highest insurance costs – such as those with on-going medical conditions – attract the highest amounts of tax.

ABI Director General, Huw Evans, said: “Insuring your home or business, your health and your possessions is the wise thing to do, taking responsibility for protecting yourself from some of the unexpected events in life. Insuring your car is a legal requirement.

“These two IPT increases are a raid on the responsible, taking advantage of those who already do the most to avoid becoming a burden on the state. The Government should be in no doubt that such steep increases in insurance premium tax may eat into the finances of both households and businesses. Any further hikes would be indefensible.”