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HMRC internal manual

Insurance Premium Tax

Accounting for Insurance Premium Tax: IPT accounting schemes

The two different accounting schemes available

IPT07100 refers to the existence of two accounting schemes. These are:

  1. The written premium or special accounting scheme. This is used by the majority of insurers and therefore we deal with this one first.
  2. The basic, cash receipt accounting scheme. This is used by a third of insurers, in particular insurers with high volume, low value business involving payment in instalments, such as health insurers.

The basic and special accounting schemes are explained in detail as follows.

Accounting scheme Paragraphs to see
The written premium or special accounting scheme IPT07600
The basic cash receipt scheme IPT07700


Using more than one accounting scheme

An insurer, or in the case of an IPT group registration, a group, has to use either the cash receipt scheme or the special accounting scheme for the whole of their business.


Changing the accounting scheme used

Although there are various conditions, which attach in particular circumstances, it is possible for an insurer (or in the case of an IPT group, the whole group) to move from one scheme to another.

A move from the special accounting scheme to the basic cash receipt scheme is:

  • subject to our permission;
  • subject to an insurer having used the written scheme to account for tax for at least a year;
  • effective from the start of a subsequent accounting period.

Subject to permission from the LIPTO, an insurer may move from the cash receipt to the special accounting scheme at any time.