8 July 2015
The Chancellor has just announced that the UK standard rate of insurance premium tax (IPT) will be increased by 3.5 percentage points to 9.5%.
From 1 November 2015 all premiums received by insurers using the IPT cash accounting scheme will be charged at 9.5%. For insurers using the special accounting scheme, there will be a 4 month concessionary period that will begin on 1 November 2015 and end on 29 February 2016, during which premiums received that relate to policies entered into before 1 November 2015 will continue to be liable to IPT at 6%.
From 1 March 2016 all premiums received by insurers will be taxed at the new rate of 9.5%, regardless of when the policy was entered into.
Insurers should begin to plan for the increase now, as systems will need to be updated.