Insurance Premium Tax - increase in rate

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:
      1. the policy being adjusted started before 1 November 2015
      2. 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 speak to your usual Aviva underwriter or sales manager.

 

* Please note the concessionary period will not be applied with business traded on SSP, OGI or TGSL.

 

Post a comment

Please Log in to post a comment.

Log in to save this page to your favourites.