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IPT to increase on October 1st 2016

The March 2016 budget delivered by George Osborne included an increase to the standard rate of insurance premium tax (IPT) from 9.5% to 10%. The rate change is effective from 1st October 2016 on all new and renewal policies on or after this date.

 

Some Insurers benefit from special accountancy rules which does allow a transitional period for existing policies incepted or renewed prior to 1st October 2016 to still benefit from the existing 9.5% rate of IPT up until 1st February 2017 on any mid-term adjustments,  however this may vary from Insurer to Insurer.

 

In Summary and as a guide IPT in most cases will be applicable as follows:-

9.5% IPT will apply to:

Policies Incepted or Renewed prior to 1st October 2016

Additional Premiums on Policies Incepted or Renewed prior to 1st October 2016 up until 1st February 2017

Return Premiums on Policies Incepted or Renewed prior to 1st October 2016


10% IPT will apply to:

Policies Incepted or Renewed on or after 1st October 2016

Additional Premiums on Policies Incepted or Renewed prior to 1st October 2016 on or after 1st February 2017

Additional Premiums on Policies Incepted or Renewed on or after 1st October 2016

Return Premiums on Policies Incepted or Renewed on or after 1st October 2016

There will of course be situations where a mixture of 9.5% and 10% IPT might apply -  for instance a motor fleet policy that is incepted or renewed on the 10th September 2016 at 9.5% IPT then has an additional vehicle on the 12th December 2016 at 9.5% IPT and a further additional vehicle on the 15th March 2017 at 10% IPT. If then both additional vehicles are deleted on the 15th July 2017 this will attract a mixture of 9.5% and 10% IPT.

Please be assured we will check and double check the IPT applicable on all transactions to ensure it is correct.

If you have any queries regarding how the increase in IPT will affect your premiums, please get in touch with your usual Bridge contact.