With new car sales booming and the second-hand market buoyant, the UK’s motor dealers could be forgiven for missing a recent increase that the Chancellor has snuck into in their costs. A leading trade insurance website is warning the motor trade that they may soon feel the pinch thanks to the increase in Insurance Premium Tax (IPT) from 6% to 9.5%, which the government brought in last November to boost exchequer revenues.
Typically small motor dealers pay around £800 to £1,500 for their motor trade insurance, so the 3.5% increase in IPT would be likely to increase a typical small dealer’s premiums by £25-£50. According to insurance site traders-insurance.com, some insurance providers could use the tax hike as a smokescreen for larger increases and actually ramp up premiums by more.
In light of the rise, Ian Beevis of insurance comparison site traders-insurance.com said, “It is more essential now than ever that motor traders and brokers search for the most competitive insurance premiums this year. The impending increase may well have passed most dealers by but they will feel the rise if they have not shopped around when they get their renewal notices.”