Adviser: Increase in UK Insurance Premium Tax
This new Client Adviser provides guidance for businesses on the increase in UK insurance premium tax, and explains the change and key dates in detail.
The UK Government announced on 16 March 2016 that the standard UK Insurance Premium Tax (IPT) will increase by 0.5% (from 9.5% to 10%), with effect from 1 October 2016. The higher rate of 20% for insurance supplied with selected goods and services (such as certain travel, motor cars, and domestic appliances) remains unchanged.
All taxable premiums received on or after 1 October 2016 by insurers, that account for the IPT using the “cash receipt” method, will be subject to IPT at 10% (unless the insurance arrangement is subject to the higher rate of IPT of 20%). Insurers that account for the IPT using the “special accounting” scheme will be given a four-month concessionary period that will begin on 1 October 2016 and end on 31 January 2017. During this period, premiums received relating to policies entered into before 1 October 2016 will continue to be liable to IPT at the current rate of 9.5%.
From 1 February 2017, the new rate of 10% will apply to all premiums, regardless of when the insurance contract was entered into.
Our Adviser explains the change and key dates in detail.