Insurance Premium Tax (IPT) Increased on 1st June 2017
So, for the third time in the last couple of years Insurance Premium Tax has increased again, this time from 10% to 12%.
Two years ago I wrote on these very pages advising of an increase to IPT from 6% to 9.5%, then, only last year wrote again about the smaller increase from 9.5% to 10%.
This unwelcome change, not only hits our customers, who are doing the sensible thing in buying insurance (something the government supposedly doesn’t want to discourage). It also means more work for insurers and brokers re-writing various letters, forms, policy schedules and other paperwork because we have to disclose the increase.
IPT is payable on most insurance policies in the UK, the only policies that are exempt are those where you pay VAT instead, which is already at the higher 20% rate or foreign policies which would be subject to the respective local taxes and a couple of other covers which are not considered domestic UK policies (some parts of marine cargo etc.)
Again, another other factor that is worth bearing in mind is IPT on mid-term adjustments and alterations is remaining the same as after the last change on October 2016. So that all alterations that become effective after 1st June 2017 and incur a cost (additional premium) will be charged at the 12% rate even if notified prior to this date.
So any charges for changes prior to 1st June will remain at 10% as long as paid before 30th May 2018, any payments outstanding after this date will have tax charged on them at the higher rate of 12%.
Any alterations after 1st June that lead to a return premium, the tax on this will be at the same rate as the policy was incepted.
The Enterprise Act 2016
With effect from 4th May 2017 new rules on the Enterprise Act come into force on policies incepted after this date.
The new rules are to encourage Insurance Companies to settle claims faster and ideally prevent a situation where customers who have suffered a loss do not suffer unfairly. Obviously, Insurers have a right to investigate claims and some claims are more complex than others but the idea is to stop insurers either deliberately or accidentally disadvantaging a customer through poor service.
So as long as a customer has appropriate cover (and sums insured) in force if a claim payment is unjustly delayed which has led to a further loss of income potentially this can be claimed back. The new provision is both in conjunction with (or separate if it doesn’t apply) actions the Financial Ombudsman can carry out in event of a complaint.
Hopefully this will help prevent some of the long term effects that can be suffered as part of a claim and further help build confidence with those buying insurance.
This information was supplied by Bill Imber BSC (Hons), Cert C.I.I., G M Imber & Sons Ltd.,
Insurance Brokers, phone 01342 327250, who specialises in insurances for the Retail,
Crafts and Market Trading Industries. Visit www.gmisl.co.uk