§ Mr. Alasdair MorganTo ask the Chancellor of the Exchequer if he will make a statement on his policy towards the issuing of non-insurance based warranties linked with the sale of motor vehicles; and what trends he has assessed in the ratio of sales of insurance-based and non-insurance-based car warranties. [28044]
§ Dawn Primarolo[holding answer 9 February 1998]: Insurance backed warranties sold with motor vehicles are now subject to the higher rate of Insurance Premium Tax. Customs and Excise have been monitoring the effect of the introduction of the higher rate and have observed that in the motor vehicle sector there has been a marked movement away from insurance backed warranties to similar products backed by the manufacturer or by a specialist provider. This supports the view that the sale of such insurance products was at times motivated by the opportunity it gave for tax avoidance.