|Insurance Premium Tax||INSURANCE PREMIUM TAX|
Insurance Premium Tax (IPT) is a tax on general insurance premiums. There are two rates: a standard rate of 10% and a higher rate of 20%. The higher rate applies where insurance is sold in relation to goods and services which are subject to VAT and to travel insurance.
There are a number of exemptions from IPT such as life insurance, permanent health insurance, reinsurance, insurance for commercial ships and aircraft and insurance for commercial goods in international transit. Premiums for risks located outside the UK are also exempt but may be liable to similar taxes imposed by other countries.
HMRC has recently published a new version of Notice IPT1 Insurance Premium Tax. The notice cancels and replaces the previous version and has been updated to reflect the growing use of the online form IPT100 and the fact that paper returns will no longer be automatically sent to those paying IPT.
The standard rate of IPT increased from 9.5% to 10% on 1 October 2016. For insurers using a special accounting scheme, there is a 4 month concessionary period during which premiums received that relate to policies entered into before 1 October 2016 continue to be liable to IPT at 9.5%. Since 1 February 2017 all premiums received by insurers will be taxed at the new rate of 10%, regardless of when the policy was entered into.
March 3rd, 2017