ATE: Insurance Premium Tax increase
The standard rate of Insurance Premium Tax (“IPT”) will increase from 6% to 9.5% from 1 November 2015.
The guidance from HMRC states:
“This measure will have effect from the date that Summer Finance Bill 2015 receives Royal Assent. The new standard rate will be due on premiums treated by the legislation as received on or after 1 November 2015, except where insurers operate a special accounting scheme. In that latter case, the new standard rate is only applied to premiums relating to risks covered by the terms of a contract entered into after 1 November 2015. From 1 March 2016, the new standard rate applies to all premiums, regardless of when the contract was entered into.”
After the event insurance
Helpfully some ATE insurers have released guidance on how they intend to deal with the increase.
Guidance from DAS can be found here: https://www.daslawassist.co.uk/news/read/142/.
Guidance from Allianz can be found here: http://www.allianzebroker.co.uk/news-and-insight/news/our-approach-to-IPT-changes.html.
It will be important to check with your ATE provider as to their approach to ensure you recover the correct amount for existing ATE policies.
You may also wish to inform the client if their liability has increased.