Insurance Premium Tax (IPT) Rate To Rise
19th September 2016
As of the 1st of October 2016, the standard rate for Insurance Premium Tax, or IPT as it is commonly known, is set to rise to 10%, a 0.5% increase on its current rate of 9.5%.
Announced in the March 2016 budget, the rise has been brought in by the government to help raise funds for flood defences in the North of England, predominantly in the Leeds and the Cumbria area, and comes on the back of an increase from 6% only back in November 2015.
First launched in 1994, IPT is a tax received on general insurance contracts and is split 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 9.5% (rising to 10% on 1st October 2016), and the higher rate is usually the same as the prevailing VAT rate, so is currently set at 20%
With a whole host of different scenarios applying to the tax, DragonDMS takes the hassle of working out the IPT away from motor traders, by calculating the correct amount when you enter both the selling and cost price.
For DragonDMS customers, the system will automatically update to include the new standard rate of 10% when it comes in to force on the 1st of October.