Fears of rise in uninsured drivers as tax receipts soar

CONSUMERS paid a total of nearly 9% more in a tax on insurance premiums last year, leading to fears of drivers becoming priced out of policies.

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The AA, which conducted the research, urged the Treasury to cut the rate of insurance premium tax (IPT) on motor policies by a quarter, with a 50% reduction for newly qualified drivers.

The standard rate of IPT - which applies to premiums such as motor insurance - has been 12.0% since 2017. It was 2.5% when it was first introduced in 1994.

Premiums being more expensive mean receipts from standard rate IPT totalled £692 million last year, up 8.6% from the previous 12 months.