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HMRC internal manual

Insurance Premium Tax

Overview and the law: who is liable to account for IPT?

The liability to account for IPT falls on the insurer, as stated in Section 52(1) of the Finance Act 1994.

Tax shall be payable by the person who is the insurer in relation to the contract under which the premium is received.

Certain intermediaries, known as taxable intermediaries, who charge a fee in relation to a higher rate contract may also be required to register and account for IPT. This is not a common situation and is discussed in more detail in IPT06800.

Because IPT is not reclaimable by policyholders, the insurer is not required to issue invoices that separately identify the tax. The insurer or taxable intermediary may:

  • make no reference to the tax on policies etc; or
  • state that premiums are, where appropriate, inclusive of IPT; or
  • specify the tax exclusive amount of the premium and the amount of tax separately.

Although you may speak to the insured, brokers or re-insurers about IPT, it is important to be clear about who the insurer is. The insurer is the person to whom the premium is due under a taxable insurance contract. There is more guidance on the definition of insurer in the next section.