Are you aware that the Insurance Premium Tax (IPT) rate is increasing?
What is insurance Premium tax?
Insurance Premium Tax (IPT) is a type of indirect tax levied on general insurance premiums in the United Kingdom.
There are 2 rates:
- a standard rate – 10%
- a higher rate – for travel insurance, mechanical/electrical appliances insurance and some vehicle insurance – 20%
There are a number of exemptions from IPT, including:
- most long-term insurance
- insurance for commercial ships and aircraft
- insurance for commercial goods in international transit
- premiums for risks located outside the UK – these may be liable to similar taxes imposed by other countries
What Happens Now?
The Chancellor announced an increase in Insurance Premium Tax to take effect from 1st June 2017. The new rate increases from 10% to 12% and this will have consequences for you and your business.
With Insurance Premiums rising year on year and limited insurers in the currently in the market, how will this affect your business? As you know the car hire market is already extremely competitive, will this mean a price hike or is this another issue which will be reducing the bottom line.
As the Chancellor also noted that the standard rate currently remains well below the VAT rate, which is set at 20% and we anticipate that further increases may be implemented in due course. The further increases will eventually see IPT at the same prevailing rate as VAT which is currently at 20%.
The new standard rate of 12% will apply to all new insurance policies and renewals incepted as of the 1st June 2017.
With this increase, the best people to discuss it with is your insurance brokers. Who are in the best place to advise.
If you need to find an insurance broker why not try one of the following:
Arthur J Gallagher – 020 7204 6000
Martinez and Partners – 01256 355656
Sentinel – 01733 843337
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