Insurance Premium Tax – a reminder
The government is raising the rate of tax by more than 50% in November which will impact on the costs of ATE cover.
One of the most innocuous-sounding changes announced in George Osborne’s July budget will see millions of Brits pay more for the likes of motor, home, contents, BTE and ATE insurance.
The rate will increase from 6% to 9.5% – according to Mr Osborne, this will bring the levy more in line with the rates charged in other major economies,
During his Budget speech, he claimed that IPT in Britain was, “well below tax rates in many other countries.”
Some types of cover, for example life insurance and long-term health insurance, remain exempt from IPT while travel policies are already taxed at a higher rate of 20%.
The new standard rate will be due on premiums treated by the legislation as received on or after 1 November 2015, except where insurers operate a special accounting scheme. In that latter case, the new standard rate is only applied to premiums relating to risks covered by the terms of a contract entered into after 1 November 2015. From 1 March 2016, the new standard rate applies to all premiums, regardless of when the contract was entered into.
Read the Policy paper here: https://www.gov.uk/government/publications/insurance-premium-tax-increase-to-standard-rate/insurance-premium-tax-increase-to-standard-rate