Expert "disappointed" with tax rise

Thursday, June 24th 2010

The average British family will have to find an extra £8 a year to fund a one per cent rise in Insurance Premium Tax.

Chancellor of the Exchequer George Osborne announced the increase in the emergency Budget earlier this week.

Malcolm Tarling, spokesperson for the Association of British Insurers, says he is "disappointed" with the news of a tax hike.

"We knew that it was always on the agenda and we are disappointed at any increase that will end up [with] our customers having to pay more for their insurance," he states.

Although he admits the rise in insurance premiums is unlikely to be large, it is still something that could put some people off buying cover.

The changes announced by Mr Osborne will come into effect from January 2011, with standard Insurance Premium Tax climbing by one percentage point to six per cent and the higher rate reaching 20 per cent, a 2.5 percentage point increase.