What Is Insurance Premium Tax?
Insurance Premium Tax (IPT) is a tax you pay when you take out an insurance policy, similar to the way you pay VAT on shopping. Though there are some exceptions, most people and businesses who take out an insurance policy pay IPT on their premium, even if they don’t realise it.
The government announced that they would be increasing standard IPT for a second time by 0.5% on 1 October 2016, from the current rate of 9.5% to 10%. The extra funds generated by the increase are to be reserved for flood defences – a figure estimated at £700 million.
What Does This Mean For You?
Firstly don’t worry, you don’t have to do anything and any cover you currently have will remain unaffected. Any new policies or renewals due to take place after 1 October will take the new IPT rate into account, which means there will be a slight increase of roughly £1 on home insurance and £2 on motor insurance.
By February 2017 it will be applied to all qualifying policies, regardless of when the contract was arranged.
If you have any more questions about the Insurance Premium Tax increase and what it means for your insurance cover, simply call the team at Hime on 0161 438 0000 or email firstname.lastname@example.org for more information.