IPT Announcement - June 2017 Rate Change

10/05/2017

The standard rate of Insurance Premium Tax (IPT) will rise by 2% from 10% to 12% with effect from 1 June 2017.

DAS Legal Expenses Insurance Company Limited (“DAS”) operates a Special Accounting Scheme, whereby we recognise full annual premiums at inception for accounting and tax purposes, irrespective of whether or not they will be paid in instalments. The inception date is the date when the period of cover provided by an insurance policy begins. For clarity, the renewal of an expired policy is to be treated as a new policy for IPT purposes.

HMRC rules permit us to apply the current standard rate of 10% to all premiums and additional premiums which meet ALL of the following criteria:

  • The policy inception date is prior to 1 June 2017; AND
  • The inception, renewal or additional premium is received before 1 June 2018; AND
  • Where the receipt relates to an additional premium, this does not represent a significant change in the risks or period covered by the policy at inception/renewal.

IPT will be charged at the new 12% standard rate for all policies after 1 June 2017 except those which meet the above requirements. To illustrate:

DAS policies with cover beginning before 1 June 2017 AND the premiums are received by 1 June 2018. IPT will be charged at 10%
DAS policies with cover beginning before 1 June 2017 AND the premiums are NOT received by 1 June 2018 IPT will be charged at 12%
DAS policies with cover beginning on or after 1 June 2017 IPT will be charged at 12%

Further guidance can be found at https://www.gov.uk/government/publications/insurance-premium-tax-increase-of-standard-rate/insurance-premium-tax-increase-of-standard-rate.

If you have any questions, please contact your DAS Account Manager.