IPT stands for Insurance Premium Tax. Effectively it is the tax that is charged on top of your premium which is then collected by your insurer and paid to the Government. IPT was initially introduced in the UK in 1994 and over the years has steadily risen from 2.5% in 1994, 4% in 1997, 5% in 1999 and 6% in 2011. During the last budget it was announced that IPT would now rise to 9.5% with effect from the 1st November 2015. You may ask “how does this affect me?” Let’s take a look at an example:
If a commercial combined policy was agreed to be renewed on the 31st October at £20,000 the full amount to pay would be £20,000 plus 6% which is an additional £1,200 (£21,200 in total). Now if the same policy was renewed on the 1st November the new rate of IPT would apply. The total to pay would be £20,000 plus 9.5% which is an additional £1,900 (£21,900 in total). You can see that based on the new rate there is an additional £700 to be paid.
In some circumstances there maybe ways where we can help to mitigate the impact of the increase. Please contact your usual ProAktive member of staff to discuss further.
By Peter Ryder BA (Hons) ACII – Schemes Team Leader