IPT ― exemptions and risk management

By Tolley
VAT_tax_img6

The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • IPT ― exemptions and risk management
  • Exemption
  • Risk management

This guidance note provides details of the types of insurance that are exempt from IPT and the IPT implications of different types of risk management. This should be read in conjunction with the following guidance notes:

  • Insurance Premium Tax (IPT) ― introduction
  • IPT ― supplies liable to the higher rate
  • IPT ― apportioning premiums and the de minimis
  • IPT ― Registration requirements
  • IPT ― accounting requirements
  • IPT ― returns, payments and penalties

FA 1994, ss 48–74, Schs 6A, 7, 7A; Insurance Premium Tax Regulations 1994, SI 1994/1774; Notice IPT 1 ― a general guide to IPT ; De Voil Indirect Tax Service V18.103 (subscription sensitive); IPT04000

Exemption

All contracts of insurance will be liable to IPT unless they are specifically exempted from IPT.

The types of contracts of insurance outlined in this section will be exempt from IPT. If a contract of insurance covers exempt and taxable contracts of insurance then the premium will need to be apportioned and IPT accounted for at the relevant rate on the taxable portion. Please see the IPT ― apportioning premiums and the de minimis guidance note for more information.

According to HMRC guidance, the following contracts of insurance will be exempt from IPT:

  • risks outside the UK
  • reinsurance
  • long-term business
  • commercial ships
  • contracts relating to the Channel Tunnel
  • lifeboats and lifeboat equipment
  • commercial aircraft
  • spacecraft
  • international railway rolling stock
  • goods in foreign or international transit
  • export finance related insurance
  • contracts relating to motor vehicles for use by handicapped persons (Motability)

Certain contacts of insurance that

More on Insurance premium tax: