Insurance Premium Tax (IPT) rate change on 1 June 2017

As you know there will be some changes to the IPT rate. We want to keep you informed so here is a full explanation of how it breaks down.

 

Below is the formal update, however, if you do need more information, please contact your usual Aviva sales manager or Underwriter

 

 

Insurance Premium Tax (IPT) will increase to 12% with effect from 1 June 2017. The higher rate of IPT remains at 20% and VAT is unaffected.

The new 12% rate will apply to new insurance policies and renewals and any mid-term adjustments (MTAs) thereon where the cover provided commences on or after 1 June 2017.

For policies where cover began before 1st June 2017 MTAs processed before 31 May 2018 are subject to IPT at 10%, so long as the MTA does not give rise to a ‘new risk’. A new risk is cover not permitted under the original policy for the purpose of the MTA.

After 31 May 2018, all premiums processed must be at the new 12% rate. The processing date is the date Aviva uses as the accounting date to recognise premiums.

Refunds should be made at the rate applicable to the originating policy.

 

SUMMARY OF RATES: Annual and Fixed Term Contracts

Policies on cover prior to 1 June 2017

  • New business and renewals: 10% if processed before 1 June 2018.
  • MTAs with no change in risk under the originating policy: 10% if processed before 1 June 2018.
  • MTAs with change in risk under the originating policy: 10% if processed before 1 June 2017.
  • MTAs with change in risk under the originating policy: 12% if processed after 31 May 2017.
  • Refund of premium (MTA reduction or cancellation): rate originally applied

 

Policies on cover on or after 1 June 2017

  • New business and renewals and any MTAs thereon: 12%
  • Refund of premium (MTA reduction or cancellation): rate originally applied.

 

SUMMARY OF RATES: Monthly Written Policies ‘Rolling Contracts’ / Contracts of Indeterminate Length 

  • Premium received or refunded on or after 1 November 2015 but before 1 October 2016:9.5% 
  • Premium received or refunded on or after 1 October 2016 but before 1 June 2017:10%
  • Premium received or refunded on or after 1 June 2017:12%

 

Bordereau schemes will follow the above unless a separate arrangement has been agreed with our Schemes Team.

 

If you have any questions about these changes, please contact your usual Aviva sales manager or Underwriter.

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