You may have heard about some changes being made to insurance premium tax rates in the recent budget. We’ve put together a little information on what this is and what it will mean to you.
What is Insurance Premium Tax (IPT)?
Announced by Kenneth Clarke in the November 1993 budget, and introduced with the finance act in 1994, IPT is a tax on general insurance premiums which (unlike VAT) cannot be claimed back. It was introduced to increase revenue from the sector, which at the time was viewed to be under-regulated and under-taxed.
Proposed new rate
When the Chancellor George Osbourne announced the Conservative party summer budget (free from the constraints of a coalition government), there was an unanticipated surprise for the insurance industry. IPT is to be raised by 3.5% from its current standard rate of 6%. The new rate of 9.5% will generally be due from 1 November 2015, with an exception for those insurers who use a special accounting scheme rather than the cash receipt method.
Who will it affect?
Increasing IPT will affect all households, businesses and schools that purchase insurance which is not exempt from IPT. This inevitably means that in general, insurance companies will be raising the prices of their policies by 3.5%.
At Absence Protection, we understand the challenges schools face when budgeting for staff absences. That’s why if you are renewing or taking out a new policy we will ensure this increase doesn't affect you by absorbing the additional increase ourselves.
To get a quote or find out anything you need to know about our staff absence insurance, you can visit our quote page here , or contact a member of our dedicated Schools Team on 0800 862 0077.