Insurance Premium Tax Set to Rise For the Third Time in Two Years
18th May 2017
The standard rate of Insurance Premium Tax (IPT) will increase by 2% to reach 12% from next month, as announced in the Autumn Statement last year. This is the third increase in two years, with the rate rising in November 2015 from 6% to 9.5%, followed by a further increase of 0.5% to the current 10% rate in October 2016.
IPT was launched in 1994 and is a tax on general insurance contracts that splits into two bands: a standard rate and a higher rate for insurance that is supplied with selected goods and services. The standard rate is currently 10% (rising to 12% on 1st June 2017), and the higher rate usually mirrors the UK VAT rate, so is currently set at 20%.
Our Dealer Management System, DragonDMS, takes the time and trouble of working out the IPT away from car dealers. Simply entering the cost and selling price will calculate the IPT due, as there are several scenarios that can be quite complicated based on the figures that affect whether standard or higher rate is applied to all, or part of the amounts entered.
Users of DragonDMS will automatically be updated to include the new 12% standard rate on the 1st of June 2017.