UK Insurance Premium Tax 2011 budget change to de minimis rule

23 March 2011 UK IPT budget change

As part of the annual UK budget this week, it was announced that two current implied de minimis rules on insurance contracts will be written into the new Finance Bill.

The first change impacts the higher rate IPT.  If a contract is sold by a broker or intermediary at less than the cost price then it will be permitted to pay insurance premium tax only on the amount charged to the insured party.  This concession is already in operation, and will be given the force of law from 1st April 2011.

The second change concerns mixed or blended policies that contain elements of exempt and taxable cover.  This concession permits the entire contract to be exempt if the cover subject to IPT is below the de minimis limits.  This concession is already in operation but it will be given the force of law during 2011.

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