Drivers are being hit with extra charges on their insurance premiums, with experts warning that it could force some motorists off the road.
New data has found that consumers paid a total of almost nine per cent more in tax on their car insurance policies in 2024.
The standard rate of Insurance Premium Tax (IPT) has remained at 12 per cent since 2017, but was only 2.5 per cent when it was first introduced in 1994.
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In response to the additional taxes impacting motorists, the AA has called on the Treasury to cut the rate of IPT by a quarter.
Experts are calling for Insurance Premium Tax rates to be frozen
|GETTY
To help younger motorists who have recently passed their practical driving tests, the AA proposes a 50 per cent reduction.
With car insurance prices rising, drivers are seeing more of what they pay go towards Insurance Premium Tax.
Data from the AA found that the total amount of IPT from car insurance has totalled almost £700million, an increase of 8.6 per cent compared to the previous year.
HM Revenue and Customs suggested that the increase was down to "rising car and property insurance premiums".
Car insurance prices have varied wildly in recent years
| GETTYEdmund King, President of the AA, said IPT was a "tax on responsible ownership", noting that it was forcing drivers to protect themselves and others from the financial damage of an accident.
He added: "Surges in the cost of insurance over recent years have ratcheted up the pain for those most prone to paying high premiums.
"Many of those are people least able to afford it, such as young and newly qualified drivers with higher risk, as well as low-income policyholders.
"That not only threatens to price them out of cover but tempts more to drive without insurance," he told the PA news agency.
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With the expensive price of car insurance and the ongoing cost of living crisis, some motorists have admitted to driving less because they cannot afford it.
Similarly, others are risking a £300 fine and six penalty points on their licence by not having a valid car insurance policy.
In the most extreme circumstances, drivers can be taken to court, receive an unlimited fine and be disqualified from getting behind the wheel.
Research from the Association of British Insurers (ABI) shows that the average cost of motor insurance has jumped 15 per cent to £622.
The ABI is calling for changes to Insurance Premium Tax
| GETTYYounger motorists are slapped with the most expensive charges as insurers see them as the most dangerous on the road, given their inexperience.
The ABI has also called on the Government to freeze the rate of IPT "until fiscal and financial conditions allow for the standard rate to be cut".
A spokesperson added: "While we appreciate fiscal headroom is limited given pressures on public spending, we continue to believe that insurance premium tax is an unfair levy on a responsible purchase."
A Treasury spokesperson said: "The overall cost of insurance is determined only in part by Insurance Premium Tax, which contributes over £8billion a year towards vital public services.
"Our cross-Government taskforce on motor insurance will deliver on our commitment to support drivers by finding ways to tackle the high cost of motor insurance."