Younger drivers face car costs increase

27 February 2020

Running a car is becoming more expensive for drivers under 25


Younger drivers now pay 6% more to run their cars compared to six months ago, according to new data from

The figures show that 17-24-year-old drivers now pay £2,370 on average, an increase of £139.

Rising insurance premiums are one of the primary drivers behind the overall increase in costs for younger drivers.

The average insurance premium for drivers aged between 17-24 years old increased by 3.6% to £1,264 a year.

New research from the price comparison website suggests that Insurance Premium Tax (IPT) may be disproportionately affecting younger drivers too.

IPT is a tax levied on companies by the government, which is factored into what you pay for insurance.

This means that if the cost of IPT increases, so will the cost of your insurance.

There are 2 types of IPT:

  • Standard rate:  which applies to general insurance policies like car insurance, home insurance and pet insurance.
  • Higher rate:  which applies to travel insurance mechanical insurance and electrical appliances insurance.

Since October 2015 the standard rate of IPT has risen four times, doubling from 6% to 12%.

The table below shows historical IPT rates.

Rates From 1 Jun 2017 1 Oct 2016 to 31 May 2017 1 Nov 2015 - 30 Sept 2016 4 Jan 2011 to 31 Oct 2015 Up to 3 Jan 2011
Standard rate 12% 10% 8.5% 6% 5%
Higher rate 20% 20% 20% 20% 20%

The current level of IPT adds an average of £134 to the car insurance policy of someone age between 17 and 24.

This compares to an average of £77 for the rest of the UK.

Dan Hutson, head of motor Insurance at, says: “The idea of driving is something that a huge number of young people look forward to.

“For the first time, you have freedom to travel as you please. But this is increasingly becoming a pipe dream for younger generations.

“Both insurance and fuel costs have jumped significantly over the last six months, meaning that even if people save the money to buy a car, it will be a serious challenge to afford the ongoing running costs.”

"Our research indicates that a majority of young people cannot cover their costs on their pay cheque alone. Without a car, many young people say that their jobs and social life would suffer.

Insurance Premium Tax is a ‘youth mobility tax’, forcing those that can least afford it to pay the most which impacts not only physical but social mobility."

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