LONDON, March 16 (Reuters) - Britain’s finance minister George Osborne said on Wednesday he would raise the tax on insurance premiums by 0.5 percentage points to 10 percent to fund flood defences, a smaller increase than some industry players had anticipated.
The hike follows a 3.5 percentage point rise in insurance premium tax last year, which has driven a rise in motor insurance premium rates, as insurers passed the tax hike onto consumers.
Motor insurance premiums rose 8 percent last year, according to the Association of British Insurers.
“I am going to increase the standard rate of Insurance Premium Tax by just half a percentage point - and commit all the extra money we raise to flood defence spending,” Osborne said in his annual budget statement.
Motor insurers Admiral and Direct Line were up 0.5 percent and 1.9 percent respectively at 1338 GMT. (Reporting by Carolyn Cohn, editing by Sinead Cruise)