The UK Government has imposed a further higher rate of premium tax on all insurance policies.
As a result of the autumn 2016 budget statement, Insurance Premium Tax (IPT) is due to rise from its current level of 10% to 12% on Thursday 01 June 2017. 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 June 2017
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 as per your current coverholder agreement 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 continue to be recorded on the certificate as inclusive “at the prevailing rate.”
All newly incepted policies will attract 12% 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 continue be recorded on the certificate as “at the prevailing rate.”
Commercial, Mesothelioma and all other ATE Insurance
All newly incepted policies will attract 12% IPT payable on the premium due. IPT will continue to be recorded on the certificate as “at the prevailing rate.”
Existing ATE Insurance Policies – Premium based upon stage at which case settles
Unlike the previous two IPT rate rises, the transitional period for insurers operating the Special Accounting Scheme is interpreted as lasting one year rather than three months.
If a new staged premium is triggered or increase in premium applied after 30 May 2018 IPT will be charged at 12%. We will therefore endorse all policies after 01 June 2018 to record 12% for additional non-current premium stages.
Please note we will not issue endorsements for existing policies where IPT is recorded as inclusive or policies which state at the prevailing rate (the IPT will be calculated and confirmed automatically when the status is updated via the Temple Online Policy System).
We will send out a further reminder notification in April and May 2018 to remind coverholders to update the status of policies to ensure that the current IPT rate on the policy is held for the current applicable premium stage.
Existing ATE Insurance Policies – Premium based purely upon damages awarded or costs recovered regardless of settlement stage
On 01 June 2018 policies will be endorsed to record 12% IPT unless the policy states at the prevailing rate.
Please note when updating the status of a policy to settled via the Temple online policy system the user will be informed of the correct IPT value applicable.
Before The Event Insurance including Employment Disputes
All BTE policies incepted on or after 01 June 2017, will be charged IPT at 12%
Where a policy is payable on a monthly basis and the policy is incepted before 01 June 2017, IPT will be charged at 10%.