Hidden tax in car insurance bills

CAR insurance has shot up by £140 since a series of steep tax hikes were unveiled two years ago.

The average annual premium for motorists shopping around for policies has gone up by 14 per cent, from £983 to £1,125.

During that time, insurance premium tax has doubled to 12 per cent in three quick-fire rises.

The levy already raises £4.8billion a year for the Treasury. But there are fears Philip Hammond will push the charge up further in the Budget.

The AA’s Edmund King said that would be unacceptable, adding: ‘No other tax in modern tax history has increased in this manner in such a short time scale and discourages lawful driving.

‘Far too often, drivers are seen as wallets on wheels.’ Most insurers have opted to pass the tax on in customer bills.

Figures from comparison website GoCompare show drivers looking for insurance are up to £142 worse off per year than before the tax changes.

Insurers say other factors have also led to higher premiums, including false whiplash claims and a new formula for calculating compensation for accident victims.