Insurance Premium Tax (IPT) is increasing from 1st June 2017on
As announced in the Autumn Statement, the Government will introduce legislation in the Finance Bill 2017 to increase the standard rate of Insurance Premium Tax (IPT) from 10% to 12% in the United Kingdom.
The new standard rate of IPT will be due from 1 June 2017 on insurance premiums received on or after 1 June 2017 which relate to risks for which the period of cover under the terms of an insurance contract begins on or after that date.
Premium payments relating to risks for which the cover begins prior to 1 June 2017 that are treated as received prior to the 1 June 2018 will be liable to IPT at the old rate. Premium payments relating to risks for which the cover begins prior to 1 June 2017 that are treated as received on or after the 1 June 2018 will be liable to IPT at the new rate.
There will be a backstop date of 1 June 2018 from which all premiums received will be subject to the increased standard rate of IPT regardless of whether they are received in respect of new or existing risks and regardless of when the cover for those risks begins under the contract.
- If the MTA results in a reduction in premium and a refund is required, IPT will be credited at the rate applied to the premium being adjusted
- If the MTA results in an additional premium being charged for a policy with term start date before 1 June 2017, where the additional cover starts before the backstop date and which is processed up to and including 31 May 2018, it will be subject to the 10% IPT
- If the MTA results in an additional premium being charged for a policy with term start date on or after 1 June 2017, it will be subject to the 12% IPT
- Any additional premiums processed after 31 May 2018 irrespective of policy or cover effective date will be subject to the 12% IPT
Please rest assured that we will do all we can as your broker to limit any other increases in your premiums at renewal, in order to assist you in dealing with this increase in Tax.
As always please contact your Account Handler/Manager if you have any queries concerning this subject.