IPT TAX RATE: UK government first introduced the Insurance Premium Tax in the early 90s.
They used the November Budget in 1993 to raise extra revenue from the insurance sector.
As a rule the Insurance Premium Tax (IPT) gets included in the price paid when you buy general insurance.
Note: United Kingdom Value Added Tax does not apply to any insurance premiums.
The type of insurance and the supplier determines the rate of Insurance Premium Tax. There are two basic types of IPT – Standard Rate and Higher Rate.
Standard Rate Insurance Premium Tax
The standard rate of IPT on the vast majority of insurances is 12%. This includes things like car insurance and insurances for the home. The standard rate IPT also applies to pet insurance.
Higher Rate Insurance Premium Tax
The IPT higher rate of 20% applies to travel insurance. The higher rate also applies to insurance organised by a supplier (not the insurance company) on things like:
- Vehicles (including hire vehicles).
- Note: The 12% standard rate of IPT applies to ordinary motor insurance.
- Certain electrical goods or other household appliances (e.g. gas central heating).
- Note: The higher rate does not apply to home contents insurance or mobile phones.
Insurance Premium Tax Exemptions
Note: There is no IPT due on policies of income protection insurances or life insurance.