In the budget the Chancellor of the Exchequer has announced that the standard rate of Insurance Premium Tax (IPT) is going to increase from 5% to 6%.
The increase will come into effect from 4th January 2011 although increase will not affect the majority of insureds until the next renewal following that date. Any insureds paying their premiums monthly via a finance house quite separate from the insurer will also not be affected until the policy is due for renewal.
However, for those insureds who are paying their existing premiums by the insurer’s own direct debit scheme, their monthly repayments will increase slightly the remaining period after January.
The rate of VAT is also going to increase to 20% from the same date. Single trip travel insurance and the inspection service element of engineering policies are both subject to VAT so the increase will have an effect on these policies.
It will be important that any revisions undertaken by our clients on sums insured at renewal should take into consideration the higher rate of VAT where appropriate in 2011.
For any queries concerning this topic please contact Chris Tebbit, Broking Director or your usual Centor contact.