Insurance Premium Tax increase: what is it and what does it mean for your insurance?

In the Summer Budget, announced on 8 July 2015, the Chancellor confirmed an increase of 3.5% in the standard rate of Insurance Premium Tax (IPT). This increase will take effect from 1 November 2015 and see the standard rate move from 6% currently to 9.5%.

Changes To IPT Charges

In keeping with this change, insurers will be updating their IPT charges in the coming months. Exactly how this is conducted may differ from insurer to insurer but as an example, Allianz will continue to charge a 6% IPT rate on new policies or renewals that come into effect before 1 November 2015, and 9.5% on those that take effect on or after 1 November 2015.

What This Means For You

For Allianz customers any Mid Term Adjustments (MTAs) on policies which are incepted or renewed before 1 November 2015 will take this change into account and, as a result of this, any changes in your premium could be subject to the new 9.5% rate.

For any MTA which results in a reduction in premium, the refund amount will reflect the original rate of ITP at 6% regardless on when the date of the MTA takes effect. For MTAs which result in you needing to pay additional premium, the current rate of 6% will apply for adjustments that take effect before 1 November 2015, however the new rate of 9.5% will apply for an additional premium charges that take effect on or after 1 November 2015.

Got A Question? Get In Touch

The exact arrangement regarding the new IPT rate may vary for different insurers so if you are unsure of how this could affect you, or have any more questions, simply get in touch with C&M Insurance on 01708 764 000 or email us at mail@cm-insurance.co.uk.