SolvedIPT07855 | Accounting for Insurance Premium Tax: transitional accounting arrangements: rates of tax
From HM Revenue & Customs · Insurance Premium Tax
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%.
1 November 2015 - standard rate increased to 9.5%.
1 October 2016 - standard rate increased to 10%
1 June 2017 - standard rate increased to 12%.
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 |
| 9.5% | 19/219 |
| 10% | 1/11 |
| 12% | 3/28 |