Car insurance tax rise 'will hit young drivers hardest', RAC warns

  • Money
The RAC has warned of the new tax rate Credit: PA

Young drivers will pay an average of more than £1,000 a year for their car insurance when a tax rise comes into force on Sunday, the RAC has warned.

The firm has slammed the "stealth tax" of drivers, with even older, more experienced paying out an average of £12.80 more when the insurance premium tax (IPT) rate rises.

IPT - which applies every time a new policy is opened - will jump from six per cent to 9.5 per cent on Sunday - and the RAC found that 18 to 20-year-olds will be hardest hit, with insurance policies for the age group rising from £972 to £1,006 a year.

Meanwhile, policies those under 26 will rise from £810 to £838.The motoring company also calculated that - thanks to fuel duty, VAT on fuel, vehicle excise duty and the new IPT rate - a typical driver who fills up a 55-litre car with diesel twice a month will end up paying around £1,200 a year in motoring taxation alone.