What is the insurance premium tax (IPT), and how does it impact insurance rates?
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althomson
1 year ago
Expert Financial Adviser Answer
Paul Ross DipPFS CII(MP&ER)
answered 1 year ago
The government has increased the IPT rate for any cover that will become effective on or after 04 January 2011. The new rate of IPT will apply to new business, renewals and mid-term amendments, as shown below.
Categories IPT Pre 04/01/2011 IPT From 04/01/2011
Motor 5% 6%
Rescue 5% 6%
Home 5% 6%
Pet 5% 6%
Travel 17.5% 20%
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Categories IPT Pre 04/01/2011 IPT From 04/01/2011
Motor 5% 6%
Rescue 5% 6%
Home 5% 6%
Pet 5% 6%
Travel 17.5% 20%
Expert Financial Adviser Answer
Darren Smith
answered 1 year ago
IPT is the insurance equivalent of VAT.
the higher rate of 20% also applies to insurances sold with a car purchase (but not car insurance), warranty products for domestic appliances and travel cover.
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the higher rate of 20% also applies to insurances sold with a car purchase (but not car insurance), warranty products for domestic appliances and travel cover.
Expert Financial Adviser Answer
Madelin Talbot
answered 1 year ago
Insurance Premium Tax (IPT) is charged as an inclusive amount within the premium received on an insurance contract. This was set at 5%, and with effect from 4th January increased to 6%. Although insurance premiums have increased, the increase is marginally less than 1% to the consumer.
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