Change in rate of Insurance Premium Tax (IPT)

As you may well be aware, the government has announced an increase in the rate of IPT (Insurance Premium Tax) from 9.5% to 10.0% as of 01st October 2016.


HMRC will collect this tax from your insurers.  However, they have the right to audit and verify your declarations and may decide to do so as part of any audits or checks they perform on your company.  With the rate of IPT increasing, it is likely that HMRC will be highly vigilant in checking this tax is being correctly charged, declared and collected.

As a result of this insurers will want to ensure that correct tax revenues are collected on relevant charges made by your company.  This means it is imperative that you tell Reason Global about the IPT you have collected with insurance charges made to your customers.

Where your customer charges are all subject to VAT (i.e. you work on a Standard Liability, Insured Remover or for self storage on an Insured Operator basis) the change in the rate of IPT does not impact on any charges you make to your customers.

So what does this mean for you our clients?


Where you offer insurance to your customers and make a charge, that charge is subject to IPT, so you need to allow for the increased rate as the cover you arrange for each of your customers constitutes a separate insurance contract.  The rules applying to the increased rate are as follows:

  • For cover arranged prior to 01st October 2016 a rate of 9.5% will apply
  • For cover arranged after 01st October 2016 a rate of 10.0% will apply
  • Any invoicing containing insurance charges and cover effective and raised prior to 01st October 2016 will be applied at a rate of 9.5% e.g. quarterly or six-monthly storage insurance arranged in advance
  • Any invoices raised after 01st October 2016 must be charged at the new rate of 10.0%

The above rules apply regardless of the renewal date of your own insurance policy.

This will mean you need to discuss the changes required with your relevant software and systems suppliers as soon as possible to be ready for the 01st October 2016 date.

For clients who use our marine insurance web-based portal, the new charges will be automatically applied from 01st October 2016 and no action will be required by you for shipments booked through this channel.  However, any customer correspondence you create will need to reflect the new 10.0% rate.



All premiums on any insurance policy incepted or renewed from 01st October 2016 will be subject to the new 10.0% rate.  This applies across all insurance policies you hold.

However, any additional premiums processed on policies incepted or renewed before 01st October 2016 will be subject to the 9.5% rate subject to the effective date of the additional premium being before 01st February 2017.



As part of the change in the rate of IPT as of 01st October 2016, HMRC have set a timescale for insurers submitting tax returns at the 9.5% rate.  We will ask you for an IPT declaration at renewal of your policy as normal.  However, we will also need an additional declaration of IPT charged at the 9.5% rate up to 01st October 2016 and we will require this declaration from you by 31st November 2016.  As there are strict timescales imposed by HMRC for these to be processed at the 9.5% rate if your declaration reaches us after 31st November 2016 you may well be subject to the new rate of 10.0% on all IPT charged to your customers’.

We are unable to guarantee that we will individually contact all clients in time regarding this mid-term policy adjustment.  Therefore, please take this communication as instruction to prepare your IPT declaration and send it to us by the date advised.  Prompt submission of declarations are imperative to ensure the new rate of 10.0% is not applied to charges made to your customers prior to 01st October 2016.

We trust this clarifies the position with regard to the IPT rate increase for you, but we are available at all times for queries or questions.  Please email or call your usual account manager at Reason Global should you require further information.