This is set to raise more than wine, spirits, beer, and air passenger duty, with only Germany, Greece, Italy, Finland and the Netherlands having higher IPT according to analysis from the Association of British Insurers (ABI).
The latest increase sees IPT double from October last year, when it was 6%, and is estimated to raise around £13bn over five years since then, making it one of the biggest revenue raising measures in recent fiscal years.
ABI director general, Huw Evans, said: “UK consumers and businesses already pay relatively high levels of IPT, and the latest increase puts us even closer to the top of the table in Europe.
“It cannot be right that people are being forced to pay an increasingly high price for doing the responsible thing and buying insurance.
“Nor can it be fair that insurance customers are bearing the brunt of recent increases while the ‘sin taxes’ like wine, spirits and gambling are unaffected.”
The Chancellor said prior to the increase that ‘IPT in this country is lower than in many other European countries’, however at that time it was already in the top third of countries in the EU according to insurance industry data.
The UK now moves above Austria and Malta in the IPT table for the first time, and also has a higher rate of 20% for travel, car hire and extended warranty insurance than they do.
IPT affects all motor, home, travel and health insurance policies whether personal or business, and unlike VAT, businesses can’t claim it back.
“Having now increased IPT three times in 18 months, it is time for Government to look elsewhere to help meet the formidable fiscal challenges it faces,” Evans added.