Introduction to Insurance Premium Tax

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Contents

What is Insurance Premium tax?

Do I need to register for the tax?

How do I register?

When should I register?

How do I account for the tax?

What records will I need to keep?

Further help and information

 

What is Insurance Premium tax?

Insurance Premium Tax is a tax on general insurance premiums. There are two rates:

  • a standard rate of 6 per cent (increased from 5 per cent on the 4 January 2011)
  • a higher rate of 20 per cent (increased from 17.5 per cent on the 4 January 2011) for travel insurance and some insurance for vehicles and domestic/electrical appliances

Most long-term insurance is exempted from the tax, as is reinsurance, insurance for commercial ships and aircraft and insurance for commercial goods in international transit. Premiums for risks located outside the UK are also exempt, but they may be liable to similar taxes imposed by other countries.

Do I need to register for the tax?

You need to register and account for Insurance Premium Tax if you are:

  • receiving taxable insurance premiums as an insurer or intend to receive premiums as an insurer
  • someone who charges the insured an insurance related fee in respect of a higher rate contract (a taxable intermediary)

You do not need to register and account for Insurance Premium Tax if you are receiving insurance premiums as an insurer wholly in relation to exempt insurance contracts.

You may also not need to register and account for Insurance Premium Tax if you are only receiving insurance premiums as an insurer partially in relation to exempt insurance contracts and partially in relation to taxable contracts. HMRC will confirm whether or not you have to register, based upon the value of the premiums involved and the corresponding taxable proportion.

How do I register?

You register by completing a form IPT 1 Application for Registration.

If you are a partnership, you will also need to complete Form IPT 2, which asks for name and address details of all partners.

If you wish to apply for group treatment, you must nominate one of the corporate bodies to act as the 'representative member'. The representative member must fill in Form IPT 1 Application for Registration and Form IPT 50 Application for Group Treatment. Form IPT 51 Group Member Details must also be completed and signed by all group members.

Forms can be obtained from the HMRC helpline on Tel 0300 200 3700.

Send the completed forms to:

The Controller
Central Collection Unit (IPT)
HM Revenue & Customs
Alexander House
21 Victoria Avenue
Southend-on-Sea
SS99 1AA

When should I register?

You need to notify HM Revenue & Customs (HMRC) within 30 days of forming the intention of receiving, as the insurer, taxable premiums.

You must be registered from the date you receive (or someone receives on your behalf) your first taxable premium.

If you are a taxable intermediary you need to register within 30 days of the date on which you decide to charge taxable intermediaries' fees.

If you don’t notify HMRC at the proper time you may have to pay a penalty.

How do I account for the tax?

Once you have registered HMRC will send you a return usually every three months for you to complete and send back with payment for any tax due.

What records will I need to keep?

You will need to keep:

  • any business and accounting records you have
  • copies of all invoices, renewal notices and similar documents which you have issued
  • policy documents, cover notes, endorsements and similar documents or copies of such documents
  • all credit notes and debit notes or other documents which show an increase or decrease in the amount of any premiums due, and any copies of such documents that you issue
  • any other records which we may specify

Further help and information

HMRC have produced notices that cover various aspects of insurance

Notice IPT1 Insurance Premium Tax

Notice 701/36 Insurance

You can access these and other notices on this website. If you are in any doubt or would like further help you can ring the Helpline on Tel 0300 200 3700.

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$START-DATA$ title=Introduction to Insurance Premium Tax^ summary=This guide is an introduction to Insurance Premium Tax, and how to register.^ doctype=BasicGuides^ date=05-Dec-2013^ author=MP6031699^ $END-DATA$
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