AA could see its prices rise due to a tax increase

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The AA has said it may have to increase its prices because the government has doubled its tax rate on insurance policies in the last two years.

The famous breakdown service reported a rise in its personal memberships of 0.4 per cent to 3,335,000, in the six months leading to the end of January.

It said it has so far been able to absorb the price rise.

Back in 2015 insurance premium tax (IPT) sat at six per cent, in June it will be going up to 12 per cent.

The AA have said it would have to look at its fees if there was another increase.

The AA said: “We have managed to protect our members,”

“But this is an industry-wide challenge and we will need to review our pricing policy in the context of any future increase in IPT.”

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