The HMRC consultation[1] sets out to explore options for addressing instances of unfair outcomes in relation to IPT. And insurethebox believes this is the perfect opportunity for its relevance for telematics insurance to be fully investigated.
From 2014 to 2017 IPT doubled - (6% 2014, 9.5% 2015, 10% 2016, 12% 2017). And, according to research by BIBA[2], IPT hits hit cash-strapped young drivers the hardest. A typical young driver paying for a £1250 policy will have seen their IPT tax rocket from £75 to £150 from 2015 to 2017 which BIBA has described as ‘clearly unsustainable’.
Simon Rewell, Road Safety Manager, insurethebox said: “Telematics has been proven to not only save lives, but save money both for young motorists and for the government through a reduction in pressure on emergency services. Removing IPT from this form of insurance therefore makes complete sense.”
While telematics has increased in popularity due to its ability to reduce the cost of car insurance, it is also proven to reduce collisions, which insurethebox believes could have the additional benefit of netting considerable savings for government if it reduces or exempts IPT on telematics insurance. According to research by BIBA2, applying 0% IPT tax to telematics insurance policies over 7 years would reduce the number of collisions resulting in killed/seriously injured road users to 259, saving Government £829 million over the period, compared to lost revenue from IPT of £588 million (at the current rate of 12%).
Simon Rewell continued: “IPT does not distinguish between traditional motor insurance and telematics insurance, even though telematics insurance has saved millions of pounds in costs related to road collisions – and more importantly saved lives. By reducing IPT on telematics insurance to 0%, Government will empower young people to take to the roads, improve road safety, and increase its own revenue.
“It is a win-win situation and to ignore the proven statistics is illogical while also limiting social mobility for young people.”
[1]https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/806571/Call_for_evidence_operation_of_Insurance_Premium_Tax.pdf
[2] https://d10ou7l0uhgg4f.cloudfront.net/wp-content/uploads/2017/09/27080832/Budget-2017-Autumn-2017-3.pdf
[2] https://www.biba.org.uk/blog-2/ipt-freeze-this-unfair-tax/
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