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HMRC internal manual

Insurance Premium Tax

From
HM Revenue & Customs
Updated
, see all updates

Accounting for Insurance Premium Tax: transitional accounting arrangements: rates of tax

  • 1 October 1994 - IPT introduced at single rate of 2.5%.
  • 1 April 1997 standard rate increased to 4%. Higher rate introduced at 17.5% on certain types of insurance sold in specified circumstances to cover motor vehicles, domestic appliances and travel.
  • 1 August 1998 - higher rate extended to all travel insurance, regardless of provider.
  • 1 July 1999 - standard rate increased to 5%.
  • 4 January 2011 - standard rate increased to 6%, higher rate increased to 20%.

Tax fractions

The fractions for extracting IPT from a tax inclusive premium are:

Rate of tax IPT fraction
2.5% 1/41
4% 1/26
5% 1/21
6% 3/53
17.5% 7/47
20% 1/6