Motoring specialists have called for immediate tax reductions to help road users struggling with increased motoring costs.
Car insurance costs continue to rise with staggering increases making it more difficult for cash-strapped Britons to use the road.
New data from Confused.com has revealed average prices are up by a staggering 58 percent across the past year.
This would work out at a stunning £366 increase for the ordinary road user making it almost impossible for those on low incomes to afford to drive.
Data from professional services firm EY analysed quotes and found premiums have increased by a whopping 25 percent over 2023.
Meanwhile, the group reveals costs are set to rise by a further 10 percent in the next 12 months.
Paul Daly, Director of InsureDaily.co.uk urged Rishi Sunak and the Government to do more to help.
He explained: “Whilst we appreciate it might be hard for the government to directly influence the price through insurance providers, one step it could take is to cut the Insurance Premium Tax (IPT) rate down from 12 percent.
“As the Government’s purse from IPT earnings is a percentage of the Insurance Premium amount, the Government is currently benefiting by earning more based on the higher premiums coming through.”
IPT charges are simply the added tax paid on general insurance premiums such as car insurance and home insurance policies.
The standard IPT rate is 12 percent but there is a higher 20 percent charge which applies to some vehicle insurance products.
According to Compare The Market, the higher rate is sometimes applied to car insurance policies taken out on new cars through a dealership.
However, IPT rates have dramatically increased in recent years making the fee more of a burden on road users.
Back in 1994, the new IPT stood at just 2.5 percent when it was first introduced.
Although, fees have soared in recent years with rates rising to six percent in 2015 and then up to 10 percent by October 2016.
Paul added: “With a reduced IPT rate, the Government could still pull in the same amount of revenue as last year and save the consumer the difference.
“This will not be a silver bullet for drivers experiencing soaring costs, but it would help reduce the pressure on those consumers struggling with the cost of living crisis”.
