Increase in Insurance Premium Tax to 10%
For all cases in which an insurance policy is started or renewed on or after 1 October 2016, the tax on insurance policies will increase from 9.5% to 10%.
The underlying cost of our insurance will not change, but the price will increase slightly to reflect the extra 0.5% in tax.
We will draw attention to this in sending out the usual early warning emails; and the literature on our website, and our stock renewal invitation documentation, will also reflect the new rate.
The position is in practice a little more complicated, in that where a policy is started or renewed before 1 October 2016 and we are asked to vary the level of cover after that date, the relevant rate of tax will still be 9.5%. These cases are likely to be somewhat rare, so far as our scheme is concerned, and this transitional arrangement will in any event only apply to variations made, and processed by the insurers, before the end of January 2017.
As a useful rule of thumb, the slightly lower rate of tax will apply, in relation to variations in pre-October 2016 cover, only until the end of 2016.