Our stance on the IPT rate change
Published: 26 Apr 2017
What it means for your clients
In the Autumn Statement 2016 the Chancellor announced an increase to the standard rate of Insurance Premium Tax (IPT) from 10% to 12% with effect from 1 June 2017. This will affect the cost of your clients’ private medical insurance policies from this date.
For some other insurance policies such as travel insurance, the higher rate of IPT remains unchanged at 20% and VAT is also unaffected.
If you have clients with policies starting or renewing prior to 1 June 2017 the following will apply:
• New business and renewals will attract the ‘old’ rate of IPT of 10%
• Where a mid-term adjustment (MTA) takes place with an effective date prior to 1 June 2017 the ‘old’ rate of 10% will apply to the additional premium.
Any new business and renewals with a start date on or after 1 June 2017 will be charged at the new, higher standard IPT rate of 12%. MTA's to policies with a start date on or after 1 June 2017 will also attract 12% on incremental premium.
MTA's that result in a refund of premium will attract the rate originally applied which could be a blend of 9.5% to 12%.
If a client pays monthly, quarterly or bi-annually, provided their Direct Debit agreements are written and agreed prior to 1 June 2017, they will have the 9.5% or 10% IPT rate applied to their premium throughout their policy year.
We’re here to help
For more detailed information please refer to our technical summary.
If you have any questions or want any further information then please speak to your usual Aviva sales consultant.
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