Following today’s Budget 2016, it has been confirmed Insurance Premium Tax (IPT) placed on premiums will increase to 10% in the second rise in nine months.
The Chancellor, George Osborne has proposed the 0.5% increase will raise £700m in order to help fund flood defences.
The IPT tax rate was last increased in November 2015 from 6% to 9.5% to bring the UK in line with the rest of Europe.
The previous rise in November 2015 came unexpectedly and has placed a strain on the insurance sector, with many insurance providers having to adjust their previous policies to keep costs competitive and to ensure policy holders still receive adequate protection.
Following the increase, insurers will be required to impose a 10% tax on customers general insurance premiums for home, contents, motor, van, car breakdown cover, business, pet, health and medical insurance policies. A higher rate of tax charged at 20% will continue to be issued on private travel, vehicle and electrical appliances insurance.
Following last year’s increase, some insurance firms are providing their customers with a breakdown summary of tax on their renewal documents to enable customers to better understand the reasons why their insurance premiums have increased.
The increase doesn’t come into effect until 1st October 2016, which gives the insurance industry time to prepare for the new changes and to continue finding the best cover on behalf of clients.
How can we help?
Perkins Slade is committed to keeping all of our clients fully aware of any changes to regulation and how this may impact them.
For more information on the Insurance Premium Tax (IPT) increase please speak to your usual Perkins Slade representative or call us on 0121 698 8000.Back to top
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