Insurance Premium Tax is on the increase from 6% to 9.5%
Who is likely to be affected
All individuals and businesses that purchase insurance which is not exempt from Insurance Premium Tax (IPT) and it affects all insurers that provide non-exempt insurance cover for UK risks.
The measure will increase the rate of IPT paid on premiums which are taxed at the standard rate of IPT by 3.5%.
Not all insurance will be included. Private individual travel insurance is already taxed at a higher 20% rate and is not affected by this change.
Mr Osborne sought to justify the increase by arguing that the cost of premiums had fallen for many families, and that Britain’s insurance premium tax was well below that of other countries – Germany, for example, levies 19%.
Whilst it may prove not to be a popular measure, it is the first really significant increase in the standard rate of IPT since it was introduced in 1994. It last rose in January 2011 when it increased from 5% to the current 6%.
The new standard rate will become effective on all insurance policies arranged or amended on or after the 1 November 2015.
Any policy adjustments reflecting a return premium will attract the original 6.5% IPT rate.
If you have any questions about this change please contact a member of our team on 0161 236 2532 or contact us by email on firstname.lastname@example.org.
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