Calls to scrap Insurance Premium Tax on insurance for EVs

New findings from The Green Insurer, the UK’s first green car insurance broker, reveal that three in five (62%) UK adults would support a campaign for the Government to remove the 12% Insurance Premium Tax on car insurance for electric vehicles.  

Such a move could help to incentivise more people to switch from traditional petrol or diesel vehicles to electric ones, thereby contributing to the reduction of carbon emissions and improving air quality.

The Insurance Premium Tax (also known as IPT) is a tax that’s added to all general insurance premiums and is set and controlled by the government. In the last decade it has doubled from 6% to 12%, and it raised £7.34 billion for the Government last year. 

Not everyone agrees with the scrapping of IPT from electric vehicle car insurance. When asked for the main reason why they did not support its removal, the top reason cited by more than a half (52%) is that they believe it would be unfair to tax electric car owners less than those who drive diesel or petrol vehicles. The second most cited reason (expressed by 26%) was that IPT exemption would not make any difference to the number of people switching to electric followed by 18% who said their main reason for not supporting its scrappage is that the Government cannot afford to forgo the income the tax generates.

The Green Insurer has launched car insurance policies that customers can buy direct from its website at and through leading price comparison websites. A customer’s Green Driving Score will be used to calculate their reward points and will also affect their renewal premiums, with discounts for people who drive in a fuel efficient way. Policies are linked to a mobile app, which monitors how customers drive. 

Every mile driven by customers will be offset using a range of carbon offset projects which are assessed for their carbon and environmental effectiveness as well as the social impact on the people and communities where they are based.

Paul Baxter, CEO, The Green Insurer, said: 

“Our research would indicate that the UK public are broadly accepting of a move to reduce insurance costs for those drivers who are opting to drive greener vehicles. We believe that such a move would align well with the Government’s goals of promoting sustainability and combating climate change.  

“Additionally, lower insurance costs could help make electric vehicles more affordable and further accelerate their adoption, thereby helping the UK meet its target for phasing out petrol and diesel cars. We understand that some people may have concerns about any reduction in the revenue generated from Insurance Premium Tax, however we believe that this short-term action could help stimulate innovation and investment in the electric vehicle sector and longer term see technological advancements and job creation.”

Image courtesy of Shutterstock.

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