Saturday, October 25, 2014
You are here: Isle of Man > Isle of Man News
Isle of Man News
General News
Insurance Premium Tax 8 February 2005

Ever heard of Insurance Premium Tax? I doubt that many of us have although it may be that you’re paying it even though you shouldn’t be.

Insurance Premium Tax (IPT) is a tax on the premium you pay for most general insurance policies where the risk is located in the UK. It applies to general insurance policies including motor, household, medical (including long-term cover), income replacement, travel and other protection cover. Life insurance policies and long-term plans with an investment element do not attract IPT.

It was initially introduced at 2.5% on 1st October 1994 but was increased in stages to the current rate of 5% in July 1999. A higher rate of 17.5% was introduced in April 1997, which applies to all travel insurance and also to insurance policies purchased as add-ons to other products, for example on an extended warranty when you buy a television, you will pay IPT at the higher rate.

But the tax is not chargeable where the policy holder is habitually resident in the Isle of Man, or where the risk being insured against would be in the Isle of Man (e.g. a building in the Island, or a car registered in the Island).

Many UK insurance companies supplying cover to Island residents will be aware that the tax is not chargeable and automatically remove it from quotes but on contacting two major UK suppliers by phone we found their staff were not aware that the tax should not be charged on Manx residents. The staff were very helpful and obtained their managers permission to remove the tax from the quote but still required us to pay the premium inclusive of the tax before they could subsequently make a refund.

The Chairman of the Isle of Man Office of Fair Trading Quintin Gill MHK asks consumers to confirm with their insurance companies, brokers or travel companies before they take out insurance with UK companies that the tax will not be charged.

He said:

"It will come as a surprise to most people that they may be paying this tax. It may be that companies such as the ones we contacted do not realise that the tax is not chargeable to Isle of Man residents. Always check before handing over your money. If you have difficulty persuading them that you do not need to pay it contact HM Customs and Excise National Assistance Helpline on 0845 0109000 for further advice."

More stories >>>  

Related News Articles
Practice Note 138/06 - Corporate Taxpayers Income Derived from Land and Property in the Isle of Man 2 November 2006
Income Tax Division, on behalf of Treasury, has today issed a Practice Note providing further guidance on the taxation of income from Isle of Man land and property received by corporate taxpayers. [More]
Practice Note 134/06 - Election to Pay Corporate Income Tax at a Rate of 10% 5 May 2006
The Income Tax (Amendment) Act 2006 will shortly receive Royal Assent. [More]
Speed Consultation - Minister Reply 12 April 2006
Minister for Transport Phil Braidwood said “The Hon Member for Rushen Mr Gill MHK has accused this Department of using prejudice and propaganda to the cost of tax payers in regard to its speed consultation and campaign. [More]
Taxation of Income derived from Land and Property in the Isle of Man 4 October 2005
Treasury has today published a consultation document on the proposed Taxation of Income derived from Land and Property in the Isle of Man. [More]
Tax Return Deadline Nears 22 April 2013
The 5 May 2013 deadline for submitting contractor’s and employer’s tax returns is now only a few weeks away. [More]

Other Guides by Maxima Systems Ltd: Disney World