The Green Insurer
Call for abolition of IPT on electric vehicle insurance
By Paul Baxter, 12th March 2024
Category: Electric vehicle
The wait continues for IPT to be removed from EV motor insurance
In recent years, there has been a growing push towards adopting more sustainable practices, including transitioning to electric vehicles (EVs) to combat climate change and improve air quality. However, one significant barrier to widespread EV adoption in the UK has been the cost, particularly when it comes to car insurance . The Insurance Premium Tax (IPT), which adds 12% to insurance premiums, has been a burden for many EV owners and potential buyers. But could scrapping IPT on electric vehicle insurance be the solution?
According to our new findings there’s certainly support for the removal of IPT on car insurance for electric vehicles, with three in five UK adults saying they would be in favour. Many recognise that the move could prove to be a potential catalyst for encouraging more people to make the switch from traditional petrol or diesel cars to electric ones, thus contributing to a reduction in carbon emissions and enhancing air quality.
Admittedly, there are other sides to the debate, with some arguing that it would be unfair to tax electric car owners less than those driving conventional vehicles. Others believe that IPT exemption won't significantly impact the number of people switching to electric, while some express concerns about the loss of Government revenue generated from the tax.
The recent Budget statement indicates that there’s no sign of IPT being removed just yet, so at The Green Insurer we are looking at other ways to make driving an EV more affordable by launching car insurance policies tailored specifically for electric vehicle owners. These policies offer rewards and discounts based on a customer's Green Driving Score, encouraging fuel-efficient driving habits. Additionally, every mile driven by customers is offset through carbon offset projects, further promoting sustainability.
We hope that short-term concerns about revenue loss may be put aside to accelerate the adoption of EVs and phase out petrol and diesel cars. The scrapping of IPT on electric car insurance could be a pivotal step towards making EVs more accessible and affordable. Such a move not only aligns with the government's sustainability goals and promotion of green initiatives but will also help to stimulate innovation and investment in the electric vehicle sector, leading to long-term benefits such as technological advancements and job creation.