The Government is raising the rate of Insurance Premium Tax (IPT) on common insurance premiums next month.
From November 1st, 2015 the standard rate of IPT will increase from 6% to 9.5%.
IPT applies to many insurance policies, such as motor, buildings and contents cover, but also affects caravan and motorhome insurance.
Some types of cover, such as life insurance and long-term health insurance, are exempt, and travel policies are already taxed at a higher rate of 20%.
How will you be affected?
The biggest impact will be on young car drivers as their insurance premiums tend to be considerably higher.
The impact on caravan and motorhome insurance will not be as severe – but you will be pay the increased rate of insurance premium tax, whoever you’re insured with.
A caravan policy with an annual premium of £151.00 (of which £8.55 is IPT at 6%) will increase to £156.00 (of which £13.55 is IPT at 9.5%), if all your circumstances remain unchanged.
Think before cutting back on your cover
Because IPT will affect many insurance products some people may be tempted to cut back on their levels of cover – but it might not be necessary.
“It’s always worth giving us a call to see what discounts we might be able to offer for things like extra security,” said Caravan Guard Managing Director Ryan Wilby. “It might be cheaper in the long term to make a small investment in improving security or by making a small increase in your excess rather than cutting back on your level of cover.”
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Note: All details correct at time of publication but may be subject to change.