When announcing the extra 2% increase last year, the chancellor, Philip Hammond, said IPT rates in the UK still remained some of the lowest in Europe and that money was needed to pay for the government’s infrastructure plans.
From 1 June 2017, most insurance policies will see the higher 12% rate applied (there is a higher rate of 20% which applies to some other types of insurance such as travel insurance and this will remain unchanged).
Since IPT was introduced by the government in 1994 at 2.5% it has been steadily increased by successive chancellors. IPT has been increased three times in the past 18 months: the latest rise of 0.5%, which took the rate to 10% came into force just last year on 1 October. Only as far back as 2010 the rate was just 5%.
Please be aware that this rate change will be applied by all UK insurers to all applicable policies.