Further Insurance Premium Tax Increase Imminent

Following on from the recent increases in the rate of Insurance Premium Tax (IPT) since 2011, this is a timely reminder that a further rise is on the way as per the 2016 Autumn Budget.

We have seen the rate of IPT double in less than 6 years, and that upward trend will continue with effect from 1st June 2017, when it’s set at a rate of 12%.  The new figure of 12% is estimated to add £51 to the average household’s bills, with an increase on car insurance of £15 a year, according to research from Mirror Money.  However, the government insists this will be offset in a number of other areas, including the clamp down of whiplash claims.

HMRC guidelines detail:

‘The new standard rate of IPT will be due from 1 June 2017 on insurance premiums received on or after 1 June 2017 which relate to risks for which the period of cover under the terms of an insurance contract begins on or after that date. Premium payments relating to risks for which the cover begins prior to 1 June 2017 that are treated as received prior to the 1 June 2018 will be liable to IPT at the old rate. Premium payments relating to risks for which the cover begins prior to 1 June 2017 that are treated as received on or after the 1 June 2018 will be liable to IPT at the new rate’.

If you would like further information on this change, please contact one of our local offices.