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HMRC internal manual

Insurance Premium Tax

Overview and the law: insurers for IPT purposes: determining whether there is an insurer for IPT purposes

Section 73(1) of the Finance Act 1994 defines an insurer as:

’ … a person or body of persons (whether incorporated or not) carrying on insurance business… ’

It is the insurer who is liable to account for IPT. A person who is regarded as a taxable intermediary under section 52A of the Finance Act 1994 is deemed to be an insurer (there is more information on taxable intermediaries at IPT06800). With the exception of the taxable intermediary, there is no liability on any broker, agent, or other intermediary who may be involved in the provision of insurance contracts, to account for IPT. However in certain limited circumstances we can make the insured party responsible for paying IPT (see IPT09300).

The purpose of insurance is to spread risk. In all cases, it does this by spreading risk between groups of policyholders. However, risk can also be spread amongst more than one insurer and this can sometimes make it difficult to determine whether IPT has been correctly accounted for. The following pages gives examples of some mechanisms used to spread the risk between insurers and how this affects who is seen to be the insurer for the purposes of IPT.