As announced in November 2016’s Autumn Statement, Insurance Premium Tax (IPT) is to increase to 12%.
First introduced back in 1994, IPT is a tax on insurance premiums split into two different bands. The lower of the two, which is being raised from the current 10% rate to 12%, applies to the likes of commercial – including public liability, professional indemnity, business insurance – and landlord insurance while a higher 20% rate band applies to travel insurance and appliance insurance.
Coming into effect on June 1st 2017, the IPT increase means that any insurance policies starting on or renewed after June 1st 2017 will have the new 12% rate applied.
Meanwhile, the 12% rate will also apply to any mid-term policy adjustments which generate additional premiums.
Premium payments on a policy which began prior to June 1st 2017 and are treated as received prior to June 1st 2018 will continue to have the old rate of 10% applied.
Additional information can be found on the HMRC website.