30/09/2015 Increase in the standard rate of Insurance Premium Tax (IPT) with effect from 1st November 2015
The UK Government announced on 8 July 2015 that they’ll be increasing the standard rate of Insurance Premium Tax (IPT). From the 1 November 2015, IPT will be increased from 6% to 9.5% for all renewals and additional premiums for mid-term adjustments (MTAs).
All policies with a start or renewal date before 1 November 2015 will see 6% IPT
- the new 9.5% rate of IPT will be applied to new business and renewals with an effective date on or after 1 November 2015
- any additional premiums from MTAs on policies effective on or after 1 November 2015 will also be subject to 9.5% IPT
- a concessionary period* will apply to premiums from MTAs up to and including 29 February 2016 where the old rate of 6% will be charged provided both of the following apply:
the policy being adjusted started before 1 November 2015
the MTA does not involve adding a premium which can't be covered by an existing policy and which should be the subject of a new policy
- any premium refunds will see IPT credited at the rate of tax appropriate in line with HRMC guidelines
- any refunds must not exceed the amount of IPT originally paid to HMRC.
Additional points to note:
- the higher IPT rate applying to some specialist classes of insurance such as travel insurance and suppliers of motor vehicles & domestic appliances is unchanged at 20%
- there are no changes to the exempt classes of insurance
- VAT remains unaffected.
If you have any questions about these changes, please contact us.