In the Chancellor’s UK Autumn Statement 2016, Insurance Premium Tax (IPT) is set to increase from 10% to 12% from 01 June 2017. The increase means IPT has doubled from 6% in less than 18 months.
What It Means For You
This will affect the cost of your insurance policy from 1 June 2017 .
For some other insurance policies, such as travel insurance, the higher rate of IPT remains unchanged at 20% and VAT is also unaffected.
If you have an insurance policy starting or renewing prior to 1 June 2017 the following will apply:
• New business and renewals will attract the ‘old’ rate of IPT of 10%
• Where a mid-term adjustment takes place on or after 1 June 2017 the new rate of 12% will apply to the additional premium.
Any policies with a start date on or after 1 June 2017 will be charged the new, higher rate standard IPT of 12%.
What will this benefit?
The impact of the increased standard rate of IPT will have a small positive impact consumer price indices (CPI) inflation.
The main benefit that will come from the increase in IPT is to help the government fund flood defences and resilience.