Insurance Premium Tax (IPT) Rate Change
In November 2015, the Standard rate increased from 6% to 9.5%. On 16th March 2016 the Chancellor
announced in the budget a further increase of 0.5%, taking the rate to 10%, with effect from 1st October 2016.
The Chancellor has indicated that the additional tax revenues will go towards flood protection which should be welcome news for those individuals and organisations located in flood prone areas.
Who will pay?
The changes will affect most general insurance premiums including individuals, households and
businesses which are not exempt from IPT.
The higher IPT rate (20%) will remain unchanged. This higher rate applies to leisure travel insurance and
some insurance for vehicles and domestic appliances.
How will this take affect?
Transitional arrangements will become clearer shortly and we will be communicating further on this
The change announced in the budget follows on from a recent significant increase in the standard rate (from 6.% to 9.5%). Industry observers had predicted a move in the UK’s position to fall more in line with other EU economies. The new rate is still some way below other countries and we could therefore experience future increases. It remains to be seen whether the Chancellor will feel the need to impose additional tax burdens on policyholders in future budget
Need further advice?
Contact your account handler at D E Ford Insurance Brokers on 01904 784141.
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