The UK Government has imposed a higher rate of premium tax on all insurance policies.
As a result of the spring government budget, Insurance Premium Tax (IPT) is due to rise from its current level of 9.5% to 10% on Saturday 01 October 2016. Please find below Temple Legal Protection Limited’s summary of the changes due to take place and how they will affect new and existing policies.
New ATE Insurance Policies Incepted after 01 October 2016
Personal Injury (excluding Mesothelioma)
All newly incepted policies will remain chargeable inclusive of IPT, therefore the price paid by your client will remain the same and no additional premium will be charged. The increase in IPT will be absorbed by Temple Legal Protection to ensure that we continue to offer the best value ATE products and premiums. IPT will now be recorded on the certificate as inclusive “at the prevailing rate.”
All newly incepted policies will attract 10% IPT payable by both the defendant for the recoverable element (premium a) and your client for the non-recoverable element (premium b). This will also apply where the premium is charged as a percentage of the insured’s damages. IPT will now be recorded on the certificate as “at the prevailing rate.”
Commercial, Mesothelioma and all other ATE Insurance
All newly incepted policies will attract 10% IPT payable on the premium due. IPT will now be recorded on the certificate as “at the prevailing rate.”
Existing ATE Insurance Policies
For all existing ATE insurance policies incepted before 01 October 2016 where the relevant premium stage remains unchanged the IPT applicable will remain at 9.5%, 6% if the policy was incepted before 01 November 2015 or 5% if the policy was incepted before 02 January 2011.
If a new staged premium is triggered after 31 January 2017, IPT will be charged at 10%. We will therefore endorse all policies after 01 February 2017 to record 10% for additional non-current premium stages. Please note this will not affect existing policies where IPT is recorded as inclusive.
Where the policy is not staged, specifically Clinical Negligence policies the IPT due will be increased on 01 February 2017 so that 10% IPT will be due where the case has not been updated to a settled status.
It is therefore of prime importance that all live policies are updated to the correct status before the 31 January 2017 to ensure the correct IPT is recorded on the policy and/or associated endorsement.
Before The Event Insurance including Employment Disputes
All BTE policies incepted on or after 01 October 2016, will be charged IPT at 10%.
Where policies are paid on a monthly basis and the policy is incepted before 01 October 2016, if the policy is declared to us before 31 January 2017, IPT will be charged at 9.5%. Policies declared to us after that date will attract a rate of 10% irrespective of inception date.