Car insurance costs soon to rise
Over last 12 months, car insurance cost has been rising for drivers in the UK. If the coalition government increases IPT (insurance premium tax) in the upcoming emergency budget, the motorists will soon be facing even higher driving costs. If we compare car insurance quotes after this tax has been levied, the premiums will be considerably more expensive than present.
It is believed by the experts that the insurance premium tax is most likely to get doubled in the forthcoming emergency budget so that more pounds are added to the treasury. The current insurance premium tax for general insurance products extending to car insurance home insurance is five per cent. The doubling of this tax is most likely to bring almost £2.3bn in the UK treasury.
If some other experts are to believed, this tax can reach upto a whopping 17.5%. If the rise in tax is about ten percent, the average car insurance premiums will rise by around £15 for a year. If it is risen to 17.5%, then the average insurance premium costs can rise by £37 for each year. The trend has already been set for rising insurance costs since the last year.
The BIBA(British Insurance Brokers’ Association) is requesting the government to discourage this hike owing to the current recessionary phase of the economy. BIBA says that this tax hike can lead to an additional financial burden to the motorists (and other general insurance customers), and they resolve to purchase of inadequate insurance covers. It further says that, this can seriously degrade the treasury amount rather than to increase it.
If we compare car insurance premium tax, it was 2.5 percent in the year 1994. This tax rose to four per cent in the year 1997 and to five percent in the year 1999.
The expected further increase may induce a shaking feeling in the general insurance industry of the UK.
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