Insurance Premium Tax Increase

1 November 2015 is an important date to note in the diary for any current or would-be purchaser of insurance as the rate of Insurance Premium Tax (IPT) increases to 9.5% for any policies incepted or renewed on or after that date.

Before you sharpen your pitchfork, light a torch and summon a mob to protest outside the offices of your friendly, neighbourhood Insurance Broker, we would politely ask you to remember that between Byron Burgers, it was Mr Osborne’s decision to impose the 3.5% increase which was announced in the Summer budget. We remain a little surprised that there was not more noise made regarding the increase, but with our cynical heads on: they call it a “stealth tax” for a reason.

Whilst the existing rate of 20% IPT applicable to Travel Insurance remains unaltered, the new rate of IPT will impact upon any Car, Home or Business Insurance policies you have in place.

Looking for a sliver of a silver lining? 9.5% is still under half of the 20% IPT paid on all policies by our European chums.

What does this mean to you if you have already taken out an annual policy this year?

We have pulled together the information provided to us by a number of insurers and the rate split below appears to be the most common approach, however this may vary depending upon insurer, so if you are in any doubt, please consult your provider.  

Policy Period begins prior to 1 November 2015

Transaction	IPT Rate
New policy commencing prior to 1 November 2015	6%
Renewal commencing prior to 1 November 2015	6%
Mid Term Adjustment (MTA) generating additional premium and effective prior to 1 March 2016	6%
MTA generating additional premium and effective on or after 1 March 2016	9.5%
MTA or Cancellation generating a return premium at any point on a policy effective prior to 1 November 2015 (regardless of whether there have already been MTAs attracting additional premium and IPT at 9.5%)	6%

Policy period begins after 1 November 2015

Transaction	IPT Rate
New policy commencing on or after 1 November	9.5%
Renewal commencing on or after 1 November	9.5%
MTA generating additional premium and effective on or after 1 November 2015 (regardless of the policy effective date)	9.5%
MTA or Cancellation generating a return premium at any point on a policy effective on or after 1 November 2015	9.5%

Simpson & Parsons Insurance Consultants Ltd are a family-owned independent insurance broker based in Windermere and are regulated by the Financial Conduct Authority. 

Please consult our website for more information about our services. Alternatively, please call us on 015394 47387 to discuss your requirements.