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 new business, renewals and additional premiums for mid-term adjustments (MTAs). There’s also a concessionary period for 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 doesn’t involve adding a premium which couldn’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 speak to your usual account handler or Account Executive