Important information regarding Insurance Premium Tax changes
Insurance Premium Tax changes
The UK Government announced on 16 March 2016 that it would be increasing the standard rate of Insurance Premium Tax (IPT) from 9.5% to 10% with effect from 1 October 2016 for all new policies and policies which renew from this date.
There will be a four-month concessionary period that will begin on 1 October 2016 and end on 31 January 2017. During this period, mid-term adjustments (MTA’s) for policies with start dates before 1 October 2016 will continue to be liable to IPT at 9.5%.
From 1 February 2017, all taxable premiums with the exception of some return premiums will be subject to the new standard IPT rate of 10% (except for certain risks that may be either exempt or subject to the higher rate of IPT), regardless of when the policy was entered into.
If you have any further questions about your policy please read our frequently asked questions below or contact your Risk and Insurance Consultant.
Frequently Asked Questions
What IPT will I be charged for new business and renewals?
All new business and renewals with a term start date on or after 1 October 2016 will be charged at 10%.
New business and renewals with a term start date prior to the 1 October 2016 will be charged at 9.5% provided the premium is booked in our systems by 31 January 2017.
What is the concessionary period and how does it apply?
A concessionary period runs from 1 October 2016 until 31 January 2017. This allows insurers to write premiums for policies that have incepted or renewed prior to 1 October 2016 at the old IPT rate provided it is processed on Zurich systems by 31 January 2017.
Policies debited on 1 February 2017 or after this date will be liable for IPT at 10% with the exception of some return premiums.
What happens if I made a mid term adjustment on policies incepted or renewed before 1 October 2016?
- Additional premiums processed up to and including 31 January 2017, will be subject to the 9.5% IPT.
- Additional premiums processed after 31 January 2017 will be subject to the 10% IPT.
- Return premiums processed will always attract the rate of IPT applicable to the original premium that the return premium reduces.