Insurance Premium Tax: guide for insurers
This is a tax on insurers and covers general insurance premiums. Find out about rates, exemptions, registering, record keeping and payments.
Insurance Premium Tax (IPT) is a tax on general insurance premiums. There are 2 rates:
- a standard rate 9.5%
- a higher rate 20% - for travel insurance, mechanical/electrical appliances insurance and some vehicle insurance
There are a number of exemptions from IPT, including:
- most long-term insurance
- insurance for commercial ships and aircraft
- insurance for commercial goods in international transit
- premiums for risks located outside the UK - these may be liable to similar taxes imposed by other countries
Details of all exemptions are given in Notice IPT1 Insurance Premium Tax.
Who needs to register
You need to register and account for IPT if you’re:
- an insurer who receives or intends to receive taxable insurance premiums
- someone who charges the insured an insurance related fee in respect of a higher rate contract (a taxable intermediary)
You don’t need to register if you’re an insurer who only receives premiums which relate wholly to exempt insurance contracts.
But you will need to register if you’re an insurer who receives premiums partially in relation to exempt insurance contracts and partially in relation to taxable contracts.
HM Revenue and Customs (HMRC) will confirm whether or not you have to submit returns, based upon the value of the premiums involved and the corresponding taxable proportion.
When you should register
You must be registered from the date you receive (or someone receives on your behalf) your first taxable premium.
You need to tell HMRC within 30 days of forming the intention of receiving taxable premiums as the insurer.
If you’re a taxable intermediary you need to register within 30 days of the date on which you decide to charge taxable intermediaries’ fees.
If you don’t notify HMRC at the proper time you may have to pay a penalty.
How to register
To register you need to complete form IPT 1 Application for Registration.
If you’re a partnership you’ll also need to complete form IPT 2, Partnership Details, which asks for name and address details of all partners.
If you wish to apply for group treatment, you must choose one of the corporate bodies to act as the ‘representative member’. The representative member must fill in form IPT 1, Application for Registration and form IPT 50, Application for Group Treatment. All group members must also complete a form IPT 51, Group Member Details.
Send the completed forms to:
Central Collection Unit (IPT)
HM Revenue and Customs
21 Victoria Avenue
How to account for the tax
Once you’ve registered, HMRC will usually send you a return every 3 months. You need to complete this and send it back with your payment for any tax due.
Find out how to pay Insurance Premium Tax.
Records you need to keep
You must keep:
- any business and accounting records you have
- policy documents, cover notes, endorsements and similar documents (original or copies)
- all credit and debit notes or other documents which show an increase or decrease in the amount of any premiums due, and any copies of such documents that you issue
- any other records HMRC asks you to keep
HMRC has produced these notices, which cover various aspects of insurance:
If you would like further help you can ring the VAT Helpline on Telephone: 0300 200 3700, Monday to Friday, 8am to 6pm.