Changes to Insurance Premium Tax
Insurance premium tax is a tax that is charged on all insurance policies. Insurance premium tax is added to the price of the premium that is quoted by the insurer. This tax has seen numerous increases recently and this trend looks to stay, as stated in the Autumn statement, insurance premium tax is due to increase again on the 1st of June 2017. This increase will see IPT (insurance premium tax) rise from 10% to 12% meaning that you may notice an increase in your overall premium.
There will be a back date of June 1st 2018, this will mean that any premium purchased on or after this date will be charged at the higher rate of 12% with some exceptions to return premiums. As of this data all premiums will be subject regardless whether it is new or existing risks.
This new rate applies to most general insurances such as; motor, property, liability, or medical insurance all of which are subject to the standard 10% IPT currently.
There are some exceptions to this which include; insurance sold with car and domestic appliances and all travel insurances will be charged at a higher 20% level which it is currently set at.
What will I be charged?
All insurance policies with a start date on or after 1st of June will be charged at 12% IPT whereas any renewals or new policies with a start date prior to 1st of June 2017 will be charged at the old tax rate of 10%.
Mid- term adjustments
If the MTA result 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.