Budget 2016: RAC comments on Insurance Premium Tax increase
RAC Insurance director Mark Godfrey said: “The Treasury is already set to raise £386m from car insurance policies as a result of increasing IPT by 3.5% to 9.5% from 1st November last year. Regardless of whether motorists should be contributing another £52m from their car insurance policies to pay for flood defences, it is unclear whether money generated from IPT will continue to be ring-fenced in this way further into the future.
“The Chancellor clearly sees IPT as a soft target, presumably as a result of getting away with raising it last summer with very little complaint from consumers or the insurance industry.
“What makes this latest IPT rise a particularly bitter pill for the insurance industry to swallow, alongside the implementation costs, is the fact that we are yet to see any of the insurance premium reductions mooted in the Chancellor’s Autumn Statement from new initiatives aimed at cutting compensation claims for soft tissue injuries in the small claims courts. In fact the cost of insurance is rising, in part due to his previous IPT rise.”
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About the RAC
The RAC provides complete peace of mind to 12m UK private and business drivers, whatever their motoring needs. Its services include:
- Breakdown assistance. Its highly-skilled, 1,600-strong branded patrol workforce attends more than two million breakdowns every year, fixing on average four out of five vehicles at the roadside. The RAC’s patrol fleet is one of the most advanced in the UK, and was the first to roll out both an All-Wheels-Up recovery system, allowing the vast majority of vehicles to be recovered from a single patrol van, and EV Boost mobile electric vehicle charging units
- Insurance. The RAC is a top-five car insurance broker having surpassed the 500,000 policies-in-force milestone in 2018. It also offers ‘black box’ telematics policies, as well as home and travel insurance
- Other motoring services. The RAC leads in the development of new solutions for business, fleets, electric vehicles and future car technology. Its additional products and services include a personal loans offering, a used car buying website, vehicle inspections and checks, legal services or up-to-the-minute traffic and travel information. It also has a network of Approved Dealers and Approved Garages which combine the trust of RAC brand with local service and convenience
The RAC also works to support the interests of its members and UK drivers on the most important motoring issues which it identifies via the annual RAC Report on Motoring and the RAC Opinion Panel. The Report on Motoring is the longest running analysis of driver opinion in the UK having been published every year since 1989.
For more information about the RAC, visit the RAC website.