Whether you're aware of it or not, if you have car insurance, home insurance, pet insurance or medical insurance, you are likely to be paying insurance premium tax (IPT).
But the rate of this tax has soared from 6 per cent in November 2015 to 12 per cent now following three increases made by the Government.
This has seen households stung with extra charges of around £200 a year, according to trade body the Association of British Insurers (ABI).
Car insurance policies, for example, have increased by £25 on average, while pet insurance has risen by £19 and home insurance by £16.
Personal private medical insurance has seen the largest hike of a whopping £117.
The UK now has the sixth highest rate of IPT in Europe, according to the ABI.
Worryingly, figures from think tank the Social Market Foundation (SMF) reveal that it's those on the lowest incomes who are hardest hit.
This is because the poorest 10 per cent of households are among those who spend the largest chunk of their disposable income on insurance to begin with.
The ABI is now urging Chancellor Philip Hammond not to up the tax again in this month's Budget – calling it a "raid on the responsible".
How to save on car insurance
- Buy 21 days in advance – Purchasing a policy three weeks in advance can cut your bill in half. Buy 30 days in advance and it could cost you hundreds because there aren't as many policies out there. Taking out a policy too late and insurers will deem you a higher risk and whack up your premium.
- Never accept a renewal quote – Your policy could double overnight if you're not careful. Make sure you put a reminder in your phone of when it's up and shop around for a better deal.
- Check more than one comparison site – These sites offer different deals so it's best to look at more than one site at the 21 day mark to see what they can offer.
- Check Direct Line and Aiva separately – Two of the biggest companies aren't on comparison sites so you'll need to check them too to see if they can offer you a better deal.
- Don't wait for a renewal – If you find a better deal elsewhere, you can cancel your existing policy and get a refund for the rest of the year. There will be a fee though – usually £50 – so take that into consideration when you look at how much you can save.
Huw Evans, director general of the ABI, said: “The Chancellor has a difficult task ahead of him this Budget but he should realise a raid on the responsible is the wrong way to balance the books.
People buy insurance because it is a legal requirement or because they are wisely protecting their homes, businesses, families and health.
"Punishing these people with another tax rise would be inexcusable.”
Find out why the simple trick that should cut your car insurance could be PUSHING UP your bills.
We also explain how to lower your car insurance premiums and get cashback.
Five ways to cut down your rising home insurance bills.
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