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How Will The Latest IPT Change Impact Me?

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How Will The Latest IPT Change Impact Me?

12th July 2019

Important changes to Insurance Premium Tax on your insurances

In the Summer Budget, announced 16 March 2016, the Chancellor confirmed an increase of 0.5% in the standard rate of Insurance Premium Tax (IPT). This will be effective from 1 October 2016. This increase will see the standard rate move from its current 9.5% to 10%.

Standard Rate IPT

The rate increase is applicable to standard rate IPT only. The higher rate of IPT – charged for travel insurance, mechanical/electrical appliances insurance and some vehicle insurance – remains unchanged at 20%.

How might these changes affect you?

New Business: If your annual policy cover starts on or after 1st October 2016 the new IPT rate of 10% will apply.

Renewals: If your annual policy renewal cover starts on or after 1st October 2016 the new IPT rate of 10% will apply.

Mid-Term Adjustments: The rate of IPT that is charged is dependent on the insurance commencement date of the policy:

Additional cover mid-term: If processed on or before the 31st January 2017 on an existing policy with a cover commencement date prior to the 1st October the IPT rate remains 9.5% and not the higher rate of 10%.

Additional cover mid-term: If processed on or before the 31st January 2017 on an existing policy with a cover commencement date on or after the 1st October the IPT rate will be processed at the higher rate of 10%.

All additional cover requirements processed on or after 1st February 2017 will attract the new rate of IPT at 10% regardless of the existing policy commencement date.

Return premiums: If you make a change to your policy that results in a refund becoming due to you, this will be processed at the rate originally charged when the policy commenced. For return premiums on policies that commenced before 1st October 2016 9.5% will apply, not at the higher rate of 10%

Please direct any queries you may have to our Customer Service team on 0800 0280 380