Image via Flickr user SuperCar-RoadTrip.fr

MILLIONS of drivers will have to pay more for their motor insurance as a new tax hike comes into force today after Chancellor George Osborne announced in his July Budget that he would increase insurance premium tax (IPT) from 6 per cent to 9.5 per cent from November 1.

IPT is added to the premiums you pay on everyday cover such as pet, household and private medical insurance, all of which are set to rise in price.

Motorists will be among the hardest hit, with more than 7.3million paying extra as a result. There is nothing you can do about IPT, but there are plenty of ways to cut the cost of motoring.

Taxing time For every £100 you spend on your car insurance, you will now pay £9.50 in IPT (£3 more than before).

If you are part-way through your policy and pay by monthly instalments, your payments will stay the same until renewal.

IPT is added to the premiums you pay on everyday cover such as pet, household and private medical insurance, all of which are set to rise in price.

Shopping around may also help to offset the recent surge in motor insurance premiums, up nearly 30 per cent in the past year, according to comparison site Tiger.co.uk.

Visit comparison sites such as MoneySupermarket, GoCompare and CompareTheMarket.com, but do not simply go for the cheapest policy, make sure it gives you all the cover you need, with an excess you can afford.

Young pay more The IPT hike will hit young motorists hardest, as it is charged as a percentage of their already sky-high premiums.

The average motorist under-25 will pay an extra £40 a year because of the change, according to CompareTheMarket.

McCulloch suggests younger motorists consider taking out a “telematics” insurance policy, which installs a black box in your car to monitor how safely you drive: “Our research shows that safer drivers can reduce their premiums by almost 50 per cent.”

Downsize to a smaller car Smaller cars guzzle less fuel than bigger motors and are also cheaper to tax and insure.

While it may be hard for families to downsize, new research shows that older drivers typically make the shift down.

More than half of retired motorists opt for more fuel-efficient cars, with the ideal retirement car an economical city hatchback such as a Citroën C3 or Vauxhall Corsa, according to new research from Age UK Enterprises.

He says you should also beware hidden administration fees for extras such as changing the vehicle on your policy.

There are plenty more ways to cut down the cost of motoring. You can search for the cheapest fuel in your area by visiting free website PetrolPrices.com and discover what you will pay at different forecourts.

To help reduce your premiums try to build up your no-claims discount, check your insurer has your correct annual mileage and notify them if you have installed an alarm or start to park off the road.

by Harvey Jones

See Full Story at express.co.uk