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HMRC internal manual

Insurance Premium Tax

Calculating the value of the premium: types of contract covering exempt and taxable risks: background

There are circumstances where a contract of insurance covers both exempt and taxable risks, e.g. life assurance with an element of accident and/or sickness cover. If this is the case the premium under such a contract of insurance must be apportioned, so that the insurer accounts for IPT only on that part of the premium which relates to the taxable risk. This part is known as ‘the chargeable amount’ (section 69(1) of the Finance Act 1994).