Recent changes to insurance premium tax (IPT) made by the government are unlikely to be welcomed by consumers.
Chancellor George Osborne announced in his emergency budget this week that IPT will increase from five per cent to six per cent as of January 4th next year, affecting policies such as home and
car insurance.
The AA acknowledged that the IPT change will hit those purchasing insurance, but pointed out that the increase has not been an unreasonable amount.
Furthermore, the organisation stressed that people should not be put off from taking out insurance as a result of the price rise.
Director of the AA Simon Douglas said: "I believe we will see premium increases of up to 20 per cent this year, for the second year running.
"My greatest concern was that a large increase in IPT would have led to large numbers of people attempting to drive their cars without insurance."
The announcement that VAT is to increase from 17.5 per cent to 20 per cent as of next year was one of the most prominent features of the budget, a development the Chancellor said was "unavoidable".
