GIM4280 | Taxation of general insurance: interest and penalties

Interest and penalties to which the insurer becomes liable as a result of any failure to comply with its obligations in connection with VAT are not deductible in computing profits for tax purposes (ICTA88/S827 (1B)).

Under the Metropolitan Fire Brigade Act 1865 insurance companies insuring (but not reinsuring) fire risks situated in the City of London or the inner London boroughs are liable to a premium tax of £35 per million, payable to the London Fire and Emergency Planning Authority. Penalties for late payment (£5 per day) under section 16 are not deductible.