New 10% insurance premium tax (IPT) rate set to come into effect has been saved
New 10% insurance premium tax (IPT) rate set to come into effect
30 September 2016
Daniel Lyons, indirect tax partner at Deloitte, said: “The new IPT rate of 10% will come into force on 1 October 2016. It is typically added to motor, home and contents insurance premiums, but does not apply to life insurance. The combined increases in IPT over the past year, 3.5% (2015) and 0.5% (2016), could cost the average two-car household* an extra £40 or more a year. Most large and small businesses pay IPT on corporate insurance premiums.
“Between now and 2020/21, the 0.5% increase in IPT will bring in £900m for the Exchequer. The Treasury’s Budget 2016 Red Book states all revenue raised from this particular rate rise will be invested in flood defence and resilience measures. Between 1994, when IPT was first introduced, and now, IPT has yielded a total of £44.631 billion** for the Exchequer. Many will be waiting to see whether the Chancellor tees up IPT for another hit in this year’s Autumn Statement.”
*This excludes private medical and pet insurance.
**According to the most recent IPT Statistical Bulletin.
Notes to editors
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.
Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.
The information contained in this press release is correct at the time of going to press.
Member of Deloitte Touche Tohmatsu Limited.