The rate at which Insurance Premium Tax is charged is unfortunately set to rise following the Chancellor’s announcement in the Summer Budget.
As of November 1st 2015 the rate will increase from 6% to 9.5%. The new figure will be due on all insurance premiums received on or after this date.
Working hard to minimise the impact
We have expressed disapproval to the Treasury at the size of the insurance premium tax increase on your behalf.
Although it is beyond our control and the funds raised will go directly to the government, we feel compelled to apologise for any increases in the total amount you will be required to pay for your insurance.
Please rest assured that as a client of Plan you are well placed to minimise the impact of the tax rise. As always we will explore all avenues available to us to ensure you receive the best value.
Your policy renewal quotation will be sent 3 weeks before it is due. Clients with cover due to renew on November 1st will soon receive invites based on the new tax rate.
We aim to provide you with ample time to explore further options if you still wish to do so.
Calculating the impact of the tax rise on new or renewing policies
The jump of 3.5% will have a noticeable and unavoidable impact on your new premium.
For example on a premium of £1000 the tax due would have been £60. Under the new legislation that amount will increase to £95, a jump of £35.
The rate applied to additional premiums
From November 1st if you request a change to your policy that requires an additional premium to be paid, you will most probably have tax applied to the amount due at the 9.5% rate.
There are a few exceptions to this rule but as we specialise in commercial motor insurance at Plan you are unlikely to fall into this category.
The rate applied to refunds or cancellations
If you are due a refund after making a change or requesting the cancellation of your policy the tax amount you receive back will be calculated at the rate at which you were charged when your policy cover begun i.e.
- You will be refunded tax at the 6% rate if cover started on October 31st 2015 or before
- IPT will be returned at 9.5% if cover started on November 1st 2015 and after
We understand how crucial value for money is for our SME clients and will do all we can to minimise the impact of the new ruling.
We also appreciate that there is a lot of detail involved in the change. If you wish to have the information explained further please do not hesitate to contact us.