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HMRC internal manual

Insurance Premium Tax

Overview and the law: value of a premium for IPT purposes

Section 50(1) of the Finance Act 1994 states:

Tax shall be charged by reference to the chargeable amount.

Section 50(2) describes the chargeable amount (where no part of a premium relates to a risk which is exempt from IPT) as:

…such amount as, with the addition of the tax chargeable, is equal to the amount of the premium.

What is included or excluded to arrive at a value of a premium for IPT purposes is considered further in IPT05150. IPT05820 describes what is treated as the chargeable amount when a contract covers both taxable and exempt risks.