IPT increases from 9.5% to 10%
In the UK, insurance policies are subject to Insurance Premium Tax (IPT). There are 2 rates of IPT: standard rate IPT for Commercial and Individual insurance policies; and a higher rate IPT of 20% for certain specialist classes of insurance e.g. travel insurance, mechanical/electrical appliances insurance and some vehicle insurances. Currently, the standard rate of IPT is 9.5%.
However in March 2016, George Osborne announced an increase to IPT as part of his Budget. This means that from the 1st October 2016, the standard rate of IPT will be increased to 10%. This will affect all Commercial and Individual insurance policies, including those that we take care of here at Letton Percival.
With this in mind, we’ve put together a summary of the changes below, along with details of how and when they are likely to affect you:
If your policy commences or renews on or after 1st October 2016:
- IPT will be charged at a rate of 10%, regardless of when the original quote was provided.
- If changes need to be made during the course of your policy, the higher rate will also apply to any refund or additional premium you may have to pay.
If your policy commenced or renewed before the 1st October 2016:
- If you paid your premium before the end of September 2016 , the tax that you have to pay on your policy will be charged at a rate of 9.5%.
- If you pay your premium on or after 1st October 2016, the tax that you have to pay on your policy will be charged at a rate of 10%.
- If a mid-term adjustment resulting in an additional premium is made to your policy from 1st October 2016, the rate of IPT will be charged at 10%.
As you can see, there are a few complications depending when your policy renews or when you carry out alterations to an existing policy. We are available to discuss any clarification you may need, please give us a call on 0151 236 4568 and we will be happy to advise you.