HM Revenue and Customs (HMRC) announced that Insurance Premium Tax (IPT) will increase from 6% to 9.5% (standard rate) effective from 1st November 2015.
As the UK insurance industry works to implement these changes, here's a quick summary of what you will need to know ahead of 1st November:
- HRMC have allowed a transition period
This period is between 1st November 2015 and 29th February 2016 inclusive, which RSA fully supports.
- We're updating our systems and processes
This includes all third parties who process business on our behalf and all transactions relating to a policy (e.g. inception, MTA, renewal).
- New business quotes and renewal invites reflect the IPT rate at the inception or renewal date.
For example. if the policy incepts or renews before 1st November 2015 then an IPT rate of 6% applies, and if the policy incepts or renews on or after the 1st November 2015 then an IPT rate of 9.5% must be applied.
- You may need to make changes to your processes and quotation documentation
To ensure that customers are aware that during the quote validity or guarantee period, if the policy is taken out on or after 1st November 2015, the new 9.5% IPT rate will apply.
- The new 9.5% IPT rate also applies to all additional or return MTA premiums where a policy incepts or renews on or after the 1st November 2015
- MTA's on a policy which incepts or renews before 1st November 2015 are subject to the transition period rules below:
- All additional premium MTA's effective between 1st November 2015 and 29th February 2016, apply 6% IPT.
- All additional premium MTA's effective on or after 1st March 2016, apply 9.5% IPT.
- Return premiums should be at the IPT rate paid originally by the end customer, which is often the IPT rate at inception or renewal.
Still have questions? Take a look at our useful FAQs, or speak to your usual RSA contact.