Insurance tax Premium (IPT): Increase to Standard rate
The Insurance tax Premium is a tax that is paid on all insurance products, such as Life Cover and Medical Insurance, at a standard rate.
It is currently at 6% in the UK and will be increasing to 9.5% on November 1st 2015 for all premiums received on/after that date.
This is an increase of more than 50% with the UK government estimating it will generate an extra £ 1.75 billion per year.
On the optimistic side :
- It is the first dramatic increase since the introduction of IPT
- At 9.5% the UK still remains one of the lowest IPT rates in Europe much lower than Germany at 19% or Italy 21.5%.
However, the higher rate of 20% applicable to travel, mechanical/electrical and some vehicle insurance will still remain the same.
Let’s just hope that individuals will not reconsider taking out some vital insurance such as Private Medical Insurance because of this increase.