Insurance Premium Tax increase

/ Agents, Blocks of flats, Landlords, Leaseholders, News

Insurance Premium Tax increase from 1st October

In the 2016 Budget the UK Government announced that it would be increasing Insurance Premium Tax (IPT) from 9.5% to 10% with effect from 1 October 2016. This will apply to all new insurance policies as well as renewals.

This half per cent increase comes on top of the 3.5% increase in IPT that came into effect last November, when it rose from 6% to 9.5% but bear a thought for our European neighbours. In Germany they pay a huge 19% for their equivalent of IPT, and in Finland it’s even worse – they pay 24%!

One of the factors influencing the increase in IPT tax is to fund increased investment in flood defence and resilience*.

According to The Association of British Insurers (ABI), following the increase in IPT last November from 6.5% to 9.5% an average of only £10 was added to the buildings and contents insurance per UK household.

Not all types of insurance will be affected. Travel insurance policies are already charged at a higher rate of 20%, while mortgage protection and life insurance are exempt from the latest increase.

* Source