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

money image

How to make a million

Whether you’re happy keeping your business small but perfectly formed or have your sights set on the sta...

Read More
lightbulb

Energy News 08/09/2017

What’s big in the world of energy this week?  Hacking group Dragonfly has infiltrated European and US e...

Read More
icebergs - iceland

Iceland’s Renewable Energy Story

Here at Switch My Business we are big fans of renewable energy. Many of our suppliers are actively transitioni...

Read More
Excellent, 9.8 / 10

Ian Howell was absolutely brilliant …

"Ian Howell was absolutely brilliant this morning helping me switch gas provider for my micro business He explained everything really simply, gave what seemed good advice, and did the switch-over for me. He even gave me a template email to send to my current provider. Brilliant! Thanks, Lisa - owner of St Davids Wellbeing."

This review was posted by Lisa Smith on the 19th of October 2017

Excellent service and very helpful staff

"Excellent service and very helpful staff"

This review was posted by Susan Westbury on the 18th of October 2017

Very helpful & straight forward

"Ian Howell was excellent, help me find a good deal and the process was very smoth."

This review was posted by Sam on the 17th of October 2017

Nicole Borneuf contacted me by e mail

"Nicole Borneuf contacted me by e mail. Didn't keep bothering me. Happy to recommend"

This review was posted by Mr Gareth Wigdahl on the 16th of October 2017

Good clear advice and saved me money …

"Good clear advice and saved me money without any pressure thanks Bhavni"

This review was posted by Sam Weston on the 16th of October 2017