(UK ONLY): On 1/6/2017, Insurance Premium Tax will be increased to 12% - applies to all policies with inception date on or after 1/6/17
28 April 2017
With effect from 1 June 2017 Insurance Premium Tax (IPT) will be charged at the standard rate of 12%, up from 10% previously. There will be no change to the higher rate of IPT of 20%.
HM Revenue and Customs (HMRC) have announced a transitional period where the previous standard rate of IPT will apply to taxable premiums for contracts which have an inception date prior to the 31 May 2017, provided that the tax point (the date an insurer writes the premium in their records or, in the case of Lloyd’s business, signed by Xchanging/LDR) occurs before the concessionary date of 1 June 2018.
This concession is applicable to insurers who use the Special Accounting Scheme. DUAL has adopted this methodology in all of its respective systems and processes as all of its insurers (with one exception), under its binding authorities have elected to use the Special Accounting Scheme.
In summary, all premiums written in DUAL’s insurers’ systems on or after 1 June 2017 would be subject to the new rate of IPT. However, the transitional period allows insurers to write certain adjustment premium for policies that have incepted or renewed prior to 1 June 2017 at the old rate provided it is processed in their systems before 1 June 2018.
In order to be able to complete the processing and signing of the premium at the old rate, all premiums must be received by 31 March 2018 to allow enough time for the funds to be processed through to the Lloyd’s carriers and/or non-Lloyd’s insurers. To meet this deadline to its carriers, DUAL requests that all producers / brokers ensure that all “10%” business (i.e., with an inception date prior to 1 June 2018) is settled to DUAL in full before 31 March 2018. Failure to do this may mean that Lloyd’s carriers / non-Lloyd’s insurers require respective intermediaries / policyholders to make good any IPT shortfall in the event this arises.
If you require any further information please do not hesitate to contact me either directly or via your existing DUAL contacts.
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