quote
menu

Business insurance: the Insurance Premium Tax (IPT) increase


Insurance Premium Tax (IPT) goes up from 6% TO 9.5% for any policies taken out after 31 October 2015. What does this mean for your business?

Benjamin Franklin famously offered on two certainties in life; death and taxes. He might have since added a third; tax increases.

What is Insurance Premium Tax (IPT)?

As the Government points out, Insurance Premium Tax (IPT) is a tax on general insurance premiums. There are two rates: a standard rate 6% (which will mostly apply to insurance covers a UK SME might be expected to have) and a higher 20% rate for travel insurance, mechanical/electrical appliances insurance and some vehicle insurance.

Why is the IPT rate going up?

The change was highlighted in the summer 2015 budget. The Chancellor, George Osborne, claimed that insurance has become cheaper for many and that Britain’s relatively low insurance premium tax offered an opportunity to raise state revenue.

The impact of the change has been widely debated, with Osborne claiming only about a fifth of premiums would be affected, although critics have protested that many more would suffer. How will business insurance be affected?

New business insurance IPT rate

From November 2015 IPT, the tax you pay on your business insurance policy, is set to go up by between 3.5% and 9.5%. For SME business owners this could mean anything from a small monthly increase to a significant addition to fixed cost overheads.

Unfortunately, your options are very limited: as the tax is on business insurer providers, you cannot avoid it. However, business insurers are likely to take different approaches to the IPT increase. Some may choose to pass on the increased cost, while others may take a hit to profits to offer a better deal.

Certainly, there has never been a better time to review your insurance policy. Shopping around could save you money and effectively nullify the potential additional costs.

 

Related Articles

Scottish Power logo

Total Gas & Power

Total Gas & Power is a business energy supplier, wholly owned by Total SA. It has been a leading business ...

Read More
SSE logo

SSE

SSE is one of the UK’s leading business energy suppliers, catering for around 500,000 business with electric...

Read More
Scottish Power Logo

Scottish Power

Scottish Power has been operating since 1901 and is now owned by Iberdola, a Spanish energy firm that is one o...

Read More
Excellent, 9.7 / 10

Aaron Gallagher recently helped me…

"Aaron Gallagher recently helped me switch the gas and electricity supply for our business. He was extremely helpful and well informed which was great for me as I know nothing in this area! He saved us a small fortune and dealt with all of the switch for us which again was extremely helpful as it wasn't completely straightforward. Thanks again for you help Aaron, it was so appreciated."

This review was posted by Rachel on the 17th of February 2018

A better deal for our Village Hall

"I recently used this company to get a better energy deal for our local village hall. Other companies were quite pushy but Lorraine and Bhavni from SwitchMyBusiness were much more professional. They sent me useful information by email enabling me and the village hall committee to make a decision about which supplier to use. The switch was done by phone and when the energy provider sent the paper work to the wrong address Bhavni sorted it out straight away. I saved over £1000 for the charity."

This review was posted by Irene Winter on the 16th of February 2018

Good Service

"Lorraine was great and very helpful. We negotiated and received a good deal on our supply."

This review was posted by Edwina Nash on the 16th of February 2018

The SME Personal Switcher

"The SME Personal Switcher, Lorraine Carey was really helpful."

This review was posted by Cross Fabrications on the 16th of February 2018

Thank you, Lorraine

"Lorraine gave us excellent service.Thank you so much."

This review was posted by Fiona Laycock on the 16th of February 2018