Insurance Premium Tax – increase in rate
The UK Government announced on 16 March 2016 that they’ll be increasing the standard rate ofInsurance Premium Tax (IPT). From the 1 October 2016, IPT will be increased from 9.5% to 10% for all new
business, renewals and additional premiums for mid-term adjustments (MTAs). There’s also a concessionary period for MTAs.
Our approach to the change
Annual and Fixed Term Contracts - The concessionary period is applicable to these policies
Policies incepted (the date that cover begins) or renewed prior to 1 October 2016
- New business and renewals will attract the ‘old’ rate of IPT of 9.5%.
- Where a mid-term adjustment (MTA) comes into effect on or after 1 October 2016, and up to and including 31 January 2017 (the end of the concessionary period), the 9.5% rate should be applied to the additional premium.
- Where an MTA comes into effect on or after 1 February 2017 the new rate of 10.0% will apply to the additional premium.
- Where an MTA reduction or cancellation takes place on or after 1 October 2016 which results in a refund of premium, the old IPT rate of 9.5% applies to that refund even if it’s made on or after 1 February 2017.
Policies incepted or renewed on or after 1 October 2016
- The new IPT rate of 10.0% will apply to;
- New business and renewals regardless of when the quote was provided or any rate guarantees.
- Any MTA which results in an additional premium.
- Any rebate for an MTA reduction or cancellation resulting in a refund of premium.
Monthly Written Policies ‘Rolling Contracts’ / Contracts of Indeterminate Length - The concessionary period is not applicable to these policies
- Any premium received or refunded before 01/11/2015 6% IPT will apply
- Any premium received or refunded on or after 01/11/2015 but before 01/10/2016 9.5% IPT will apply
- Any premium received or refunded on or after 01/10/2016 10%IPT IPT will apply
We’re reviewing the position for bordereau schemes and additional guidance will follow where necessary.
If you have any questions about these changes, please speak to your usual Aviva sales manager or usual underwriter.
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