Advantage Talk - Insurance Premium Talk Increase

1. EXPERT ADVICE. WAY ABOVE THE ORDINARY. Insurance Premium Tax What is Insurance Premium Tax? How is IPT calculated and charged? IPT is calculated as a percentage of the final policy premium. The standard rate applies to general insurance products. A higher rate, in line with VAT, is charged on certain goods & services including Travel Insurance. Insurance Premium Tax (or IPT) was first introduced in 1994 following Kenneth Clarke’s announcement in the November 1993 Budget. The Tax is governed by the Finance Act 1994 and was introduced to raise revenue from the insurance business sector. Companies are required to register for IPT if they are an insurer who receives or intends to receive taxable insurance premiums or an intermediary who charges a fee to the insured in addition to the amount of higher rated premium due The sector was considered under taxed since, despite being a service industry, it is exempt from Value Added Tax (VAT) by EU legislation. Please note: Advantage Risk Solutions Limited do not levy IPT on our fees. Advantage Risk Solutions Ltd is authorised and regulated by the Financial Conduct Authority (FCA). Firm reference number 629688. www.advantageuk.net ISSUE 09 May 2017

2. YOUR PROTECTION IS OUR BUSINESS What is changing? Phillip Hammond’s Autumn Statement 2016 announced that the standard rate of IPT will increase from 10% to 12% from 1st June 2017. That means all polices incepted or renewed on or after 1st June 2017 will be subject to the increased IPT charge. Whilst the Chancellor did not announce a further rise in the March 2017 Budget, successive hikes in standard rates of IPT have taken the rate levied on general insurance products from 6% in November 2015 to 12% in June 2017. How can we help? Advantage Risk Solutions Limited will always keep you informed of changes such as this and make clear in all our correspondence how they will affect your policy and your premium. IPT is levied on total premiums, which usually include commission. In some cases, it may be beneficial to structure a programme using a combination of fees and net premiums or lower commission rates to achieve an overall more competitive pricing for your insurances. We can discuss the best option for you. Discover the Advantage difference What can you do? Whilst the Insurance Industry continues to lobby for no further IPT rate increases, IPT cannot be avoided. Want to know more? Let’s talk: As with any other form of taxation, avoidance of IPT is an offence. The same rate is charged by all relevant companies and whilst it is collected by them, the charge is remitted to HMRC, so shopping around will not reduce IPT obligations. Our advice is to manage your budgets and be prepared to see an increase in the premium payable to insurers, even if all cover and rates stay the same. t. 01256 483969 e. hello@advantageuk.net Any views or opinions expressed in this briefing are for guidance only and are not intended as a substitute for appropriate professional guidance. We have taken all reasonable steps to ensure the information contained herein is accurate at the time of writing but it should not be regarded as a complete or authoritative statement of law. Advantage Risk Solutions Ltd is authorised and regulated by the Financial Conduct Authority (FCA). Firm reference number 629688. www.advantageuk.net ISSUE 09 May 2017