Insurance Premium Tax to rise to 12%
It was recently announced that insurance premium tax (IPT) will increase to 12% with effect from 1 June 2017.
All insurance policies with an inception or renewal date of 1 June 2017 and later will be subject to the new 12% IPT rate.
Special accounting scheme
We use the ‘special accounting scheme’. This means that the premium for risks incepting prior to 1 June 2017 (at the current 10% IPT rate) MUST be paid by 31st May 2018.
The higher rate of 12% IPT applies to when the risk is bound rather than when it is quoted. Any risk bound on 1 June onwards will be liable for 12%.
Additional and return premiums 1 June onwards
Any return premium is given at the rate of tax levied when paying the premium.
If an additional premium is processed prior to 1 June 2018 then the rate of IPT is the same as at the policy’s inception date
If the additional premium is processed on or after 1 June 2018 then IPT applies at 12%.
Further information can be found on the HMRC website.