Insurance costs set to rise with new tax hike

Households are facing another hike to their insurance costs from this week, which could push the average annual bill up by nearly £50, an industry body is warning.

From tomorrow, the rate of insurance premium tax (IPT) will increase from 10 percentto12percent–ina move which will mean the rate has doubled in less than two years.

The tax is payable on most general insurance policies including home, motor, pet and private medical insurance, as well as commercial insurance taken out by businesses.

The Association of British Insurers (ABI) has calculated that the latest increase could add an extra £47 to the average household’s annual general insurance bill.

The ABI said customers who already pay most will be hit hardest by the hike.