Important information about Insurance Premium Tax

 

At SMP Healthcare Ltd we’re committed to keeping our clients new and existing up to date about changes that affect Private Medical Insurance policies. That’s why we want to let you know about a change to Insurance Premium Tax and what it means to those who either a hold a policy, or are considering putting a policy in place.

First things first…what is Insurance Premium Tax?

*Insurance Premium Tax (IPT) is a tax on general insurance premiums and therefore applies to Private Medical Insurance policies.

There are two rates of IPT:

– A current standard rate of 10%

– A higher rate of 20% – for travel insurance, certain mechanical/electrical appliances & certain insurance when sold with some motor vehicles.

* Information sourced https://www.gov.uk/guidance/insurance-premium-tax

Private Medical Insurance falls under the standard rate, and it is this that is added to your quotation/premium.

However, from the 1st June 2017, the standard rate of IPT will increase from 10% to 12%.

How will the rise in IPT affect your Private Medical Insurance premium?

In general, most insurers will allow policyholders who are mid-contract to continue with the current rate of IPT for the duration of the 12 month contract. For example, if a client’s 12 month contract began on the 1st January 2017 all 12 of their monthly premiums will attract an IPT rate of 10%.

For policies that are due to renew on or after the 1st June 2017, their renewal quotation will include the increased rate of IPT at 12%.

Going forward…

With IPT set to increase again, there is no denying that this will have an effect on finances for many individuals and business, however SMP Healthcare Ltd are here to help you, whether you are a new or existing client we will ensure we find the right Private Medical Insurance policy at the right price for you.

Medigest, an online information portal for the Private Health sector has touched upon this issue in their recent news and brought to attention a petition that looks to exempt Health Insurance from IPT. For further information about this please visit https://www.medigest.uk/amii-petitions-increase-insurance-premium-tax/.