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IPT is on the rise again

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The Crew Behind You

20 April 2017 | Comments (0)
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IPT is increasing from 10% to 12% from 1 June 2017 and will affect all new business and renewals of commercial and personal policies, except travel insurance.

Managing mid-term adjustments (MTAs)

The government’s new rules apply for the period 1 June 2017 until 31 May 2018. This means any policy that starts before 1 June 2017 (and is due some additional premium following an MTA) will be taxed at the previous rate of 10%. You’ll need to ensure all premiums are with us before 1 June 2018. After this date, any premiums we receive will be subjected to the new higher rate of 12%, regardless of the start or renewal date.

For policies which start from 1 June 2017 onwards, the new higher rate will apply.

What do you need to do?

You don’t have to do anything. The relevant IPT will be applied automatically to your customers’ policies. Your software house will contact you separately if your system needs to be updated to allow for the rate change. Please contact your software provider if you are unsure how it is implementing the changes.

Want to know more?

The table below shows how we’ll apply the IPT change and you’ll also find the answers to some frequently asked questions.
 

Policies started or renewed before 1 June 2017 Policies started or renewed on or after 1 June 2017

Existing policies

IPT will remain at 10%

New policies

IPT will be applied at 12% regardless of when any rate guarantee or quote was provided.

Additional premiums from MTAs

MTAs applied between 1 June 2017 and 31 May 2018 (inclusive) – 10% rate applies to any additional premium

MTAs applied after 1 June 2018 - 12% rate applies to any additional premium.

Additional premiums from MTAs

The 12% rate will apply to all MTAs that result in an additional premium.

Refunds from MTAs or cancellations for:

Policies which started or renewed between 1 October 2016 and 1 June 2017

The 10% rate will be applied to refunds resulting from MTAs or cancellations.

Policies which started or renewed between 1 November 2015 and 1 October 2016

The 9.5% rate will be applied to refunds resulting from MTAs or cancellations.

Policies which started or renewed before 1 November 2015

The 6% rate will be applied to refunds resulting from MTAs or cancellations. 

Refunds from MTAs or cancellations

The 12% rate will be applied to refunds resulting from MTAs or cancellations. 


FAQ
 

Q.         Does this increase apply to all UK residents?

A.         Yes. But as the Channel Islands and Isle of Man are not part of the UK, IPT does not apply.

Q.         I’ve already spoken and agreed the necessary changes with my Ageas scheme underwriter.
            Does this communication change anything?

A          No. Please continue to liaise with your local contact on specific changes you are making.

Q.        Have the rules above been agreed with HMRC?

A.        Yes. Our interpretation of the rules have been discussed and agreed with HMRC on our behalf by the
            ABI.

Q.        Will we need to ensure that all new business, renewal and MTA information relating to
            policies 
incepting before 1 June 2017 are provided to Ageas before 1 June 2018?

A.        Yes. For IPT to continue at 10%, we must have received premium and information relating to the policy
            before 1 June 2018.

Q         Will you honour a guaranteed quote if the premium rises due to the IPT increase?

A         No. All quote guarantees are subject to IPT being calculated at the correct level.

Q         How will this affect commission refunds following an MTA or cancellation?

A         Commission adjustments following cancellations, refunds and MTAs resulting in a return premium will
           remain based on the IPT rate applicable to the original policy.

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