A controversial increase in insurance premium tax (IPT) takes effect today, with car, home, health and pet insurance costs all set to rise as a result.
As of today, Thursday 1 June, the government has increased the IPT rate by 2% to 12%. This is expected to signal increased bills for millions of consumers.
IPT has risen four times since October 2015, doubling from 6% to 12%. Critics have called this a tax increase by stealth.
The AA has already warned consumers that it expects both its car and home insurance policy costs to increase.
This tax change comes as research shows the average car insurance policy has jumped by almost £100 in the past year – equivalent to a 14% rise.
Price comparison website Compare the Market says the typical policy taken out this month will cost £800, up from £701 a year ago. In June 2015, the typical policy cost £600.
Compare the Market's director Simon McCulloch says insurance premium tax has been a major issue for consumers.
“This is somewhat of a watershed moment for car insurance,” he says. “The cost of an average policy has risen by around a third in two years, demonstrating just how difficult it is for people to get on the road.
“No one factor has driven premiums up this much, but some measures taken over the past years have put serious pressure on policies. One of the most prominent causes of these rises is the doubling of insurance premium tax over the past two years.”