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IPT Increase - November 2015

Insurance Premium Tax Is Increasing to 9.5% from 1st November 2015. Find out what this means for our customers.

Insurance Premium Tax (IPT) is levied on most insurance policies in the UK, including motor trade insurance. The tax rate is due to increase to 9.5% from 1st November 2015, but the way in which this is applied depends on a number of factors. To help you understand what rate will be applied to your policy, we have set out a number of examples.

History of IPT

IPT is a government imposed tax that insurance companies are obliged to collect and remit to HMRC. Road Runner acts as an intermediary and we are obliged to include IPT in all premiums we collect on behalf of our scheme’s insurer, AXA. It applies to policies issued by us in England, Wales, Scotland and Northern Ireland (but not to policyholders in Isle of Man).
When IPT was first introduced in 1994, it was set as 2.5%, rising to 6% and now to 9.5% from 1st November 2015. With customers’ policies incepting throughout the year, we want to help you understand how the change is being applied.

How the Increase in IPT is Applied

The increase is applied in different ways, depending on the specific circumstances of your policy. To help explain, we have set out below a number of different scenarios that can arise:

  1. Your policy starts or renews on or before 31st October 2015: IPT is applied at 6%

  2. Your policy starts or renews on or after 1st November 2015: IPT is applied at 9.5% regardless of when the policy is actually set up.

  3. You make an adjustment to an existing policy which results in an additional premium becoming due:

  • If the current policy start date is before 1st November 2015 and the process date is between 1st November 2015 and 29th February 2016 then the IPT will be 6%
  • If the current policy start date is before 1st November 2015 and the process date is after 1st March 2016 then the IPT will be 9.5%
  • If the current policy start date is after 1st November 2015 and the process date is after 1st November 2015 then the IPT will be 9.5%
  1. You make an adjustment to an existing policy which results in a return premium becoming due or the policy is cancelled for any reason:

  • IPT is based on the effective date of the current policy year.  If the policy start date of the current policy year is prior to the 1st Nov 2015 then the IPT will be 6%. 

  • If the current policy start date is on or after the 1st Nov 2015 then the IPT will be 9.5%.

Please note that Road Runner and AXA have no discretion in how these rules are applied. If you have any queries about your own individual circumstances, please contact us.

Road Runner is a trading name of Aston Scott Ltd. Authorised and regulated by the Financial Conduct Authority (Reg No. 308048). For your protection, telephone calls may be recorded or monitored.

Copyright © Aston Scott Ltd 2015. All rights reserved. Road Runner, 28 Dingwall Road, Croydon, CR0 2NH. Tel: 0330 822 0468

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