01 March 2024 , 09:52
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The Association of British Insurers (ABI) says that two-thirds of people don't really know about a tax that is "hidden in plin sight".
This tax is called insurance premium tax (IPT) and it's added to most insurance like car, house, pet, and health insurance. The ABI thinks this tax is especially tough on people with less money because they spend more of what they earn on insurance for things like their home and car.
Even though the tax is charged to insurance companies, they add it to the price we pay for our insurance. The ABI asked OnePoll to talk to 2,000 people and found half of those interviewed didn't really understand how IPT affects what they pay for insurance.
This is even though the tax now means we pay £67 more on average for car insurance, the ABI worked out. The ABI has made a character called Snippy to help tell people they want the government to make IPT smaller in the next budget.
Mervyn Skeet, who works at the ABI, said: "It is high time we unmask this tax which penalises people and businesses for being responsible. This tax hits the poorest hardest because they typically spend more on insurance, such as home and motor cover, as a proportion of their income."
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"There has never been a better time for the Government to show its support to the millions of homeowners and businesses who do the right thing by buying insurance. We should cut IPT now."
A Treasury spokesperson said: "Insurance premium tax, which contributes over £7 billion towards vital public services, forms just one part of the overall cost of insurance and the extent to which it is passed on to customers is a decision for insurers. Other factors affecting the price of insurance include the level of competition in the market."
Insurers have also pointed out that the rising costs of living are making insurance more expensive, with higher prices for materials and labour needed for repairs.