Insurance costs could climb next year although fuel duty will remain frozen, it was confirmed in this afternoon’s Autumn Statement.
Chancellor of the Exchequer Philip Hammond announced that insurance premium tax will increase from 10% to 12% in June 2017.
He said: “Insurance premium tax in this country is lower than in many other European countries, and half the rate of VAT.
"In order to raise revenue, which is required to fund spending commitments I am making today, it will rise from 10% currently, to 12% from next June.”
RHA chief executive Richard Burnet said that the rise was “a disappointment” and Adam Marshall, director general at the British Chambers of Commerce, tweeted "not pleased to see rise in Insurance Premium Tax. Makes critical safety net for businesses more expensive".
However the statement confirmed that fuel duty will remain frozen for a seventh consecutive year, despite concern in 2015 that it would begin to rise again.
Hammond said: “Today we stand on the side of the millions of hardworking people in our country by cancelling the fuel duty rise for the seventh successive year.
“In total this saves the average car driver £130 a year and the average van driver £350.”
FairFuel UK spokesman Quentin Willson expressed disappointment at the statement.
He said: “I’m disappointed that the chancellor didn’t instantly put money into everyone’s pockets by cutting duty. There’s an immediate benefit to the economy. This is a lost opportunity from a government still afraid of supporting drivers and roads”
Burnett added: "The news that Insurance Premium Tax is to rise by 2% comes as a disappointment – a disappointment that will, to an extent, be offset by the news that fuel duty, held at 57.95ppl is to be frozen for the seventh year in a row.
“Obviously a fuel duty cut would have made a real difference to our members’ operating costs but a further fuel duty freeze? We’ll happily take that,” he said.
The chancellor also announced that the new National Living Wage will rise from £7.20 an hour to £7.50, and confirmed £23bn of funding for infrastructure and innovation improvements.
