Today, all Brits’ eyes were set to see the budget session which was broadcasted by official channel of parliament on 11:30AM. Financial experts & analysts from Insurance and auto industry were two of the most excited for George Osborne’s (Chancellor of the Exchequer) budget speech. In this season, the rumors or insider source were indicating towards few major financial changes like hike in IPT (Insurance premium Tax) and rise fuel duty on both diesel and unleaded petrol. Sources also predicted few interesting announcement on driverless car’s testing on UK roads.
At 1:18pm, George Osborne announced 0.5% hike in Insurance Premium Tax (IPT) which was lower than predicted hike (3%). Recent IPT hike will add extra £700million to Government’s treasury and these money will be used to improve flood defences. New insurance premium tax will be 10% which was 6% before November 2015.
Latest IPT raise will impact 7.3 million car insurance, 4.7 million home insurance, 3 million private medical insurance and around 3 million pet insurance policies. It will hit the average household insurance bill by £73 a year.
For UK households, insurance bill will go up once again in a half year. In last budget when IPT rose by 3.5% hit the insurance bill around £100 a year for the family with two cars, a pet and medical insurance.
Huw Evans, Director General of the Association of British Insurers (ABI) said “A further increase in IPT is disappointing news.”
“Increased investment in flood defences is vital but should be part of core Government expenditure, not an afterthought paid for by raising taxes on people and businesses who do the responsible thing in protecting themselves through insurance. We will be examining the detail closely to ensure the revenue raised is actually spent on new flood defence schemes.” He also added.
After Insurance Premium Tax announcement, ABI tweeted estimated rises on insurance bill due to last two increases (3.5% in November 2015 and 0.5% in recent #Budget2016).
The 2 rises in IPT add an average:
£15 to a private motor policy £12 to home (bldg & cont) £12 to pet £78 to private medical#Budget2016
Insurance Premium Tax (IPT) was first introduced in 1st October, 1994 and at that time it was only 2.5%. Today’s 0.5% hike in IPT is fifth increase in the standard rate since its introduction. Let me give a short overview of its increase over years.
At 1:29pm, a big relief for auto industry announced by George was that fuel duty will be frozen. Budget soothsayer was shouting a significant increase in fuel duty as oil prices fallen down in last few months. Government also keep fuel duty frozen on beer and cider but announced 3% rise in hand-rolled tobacco.
And at the end, I would like to share some key points of Budget2016 which affects UK households and businesses.