IPT Changes

Published on 30 Sep 2015


Today we have deployed changes to cater for the new IPT rate of 9.5% effective from 01/11/15.

Like all those affected across the insurance industry, we've had to be proactive in ensuring that we meet our customer needs, as the directives around this issued by the Government were not totally clear with at least a degree of ambiguity.

We consulted with our business clients and gained consensus from them to provide for a grace period.

To summarise, the Summer 2015 Budget included an increase to the standard rate of Insurance Premium tax (IPT) from the current 6% to 9.5%.

The rate change becomes effective from 01/11/15 and provides for a transitional (grace) period that ends on 29/02/16. This means:
  • Policies with a start/renewal date on/after 01/11/15 are liable to 9.5% IPT
  • Policies with a start/renewal date before 01/11/15 are liable to 6% IPT
  • Premiums paid on/after 01/03/16 will become liable for 9.5% IPT irrespective of the rate received from the policyholder or the start/renewal date of the policy
  • Any additional premiums or other policy changes (Mid-Term Adjustments) occurring before 01/11/15 are liable to IPT at 6%
  • Any additional premiums or other policy changes (Mid-Term Adjustments) occurring on or after 01/11/15 but before 01/03/16 are liable to IPT at 6% provided the underlying original policy premium was established prior to 01/11/15 and any additional premiums are booked before 01/03/16
  • Any additional premiums or other policy changes (Mid-Term Adjustments) occurring on or after 01/11/15 but before 01/03/16 where the original policy has a start/renewal date after 01/11/15 are liable to IPT at 9.5%
  • Any premium refunds will attract IPT credit according to the rate of tax appropriate at the start/renewal date

The transitional period does offer some period of grace for processing. However, it should be noted that if premiums due on pre-01/11/15 policies are not booked by 29/02/16, then they will be liable to the new rate of 9.5% IPT.