Are you paying unnecessary IPT?
Insurance Premium Tax (IPT) is a UK tax applied to general insurance premiums. There are two rates. Standard at 9.5% and a higher rate of 20% for travel insurance, mechanical / electrical appliances insurance and some vehicle insurance.
Premiums for risks located outside the UK are usually exempt. Therefore if you are taking out an insurance policy with a UK supplier, ask about exempting IPT before you enter into the contract or renewal. Some suppliers may ask you to fill out an IPT exemption declaration form confirming your residential status as being permanently outside of the UK for the period of insurance. It is likely that you will have to return this before the supplier deducts the IPT. Ask what the arrangements are before you sign up or renew. In most cases they will not refund retrospective overpayments.
3 Recent Case Studies Mick and Pam have private medical insurance. They are automatically charge IPT even though the supplier knows they are non-UK residents. In the past, they used to send Mick an IPT exemption form to fill out with their annual renewal. When it was returned they would send out a revised renewal with the IPT removed. They have stopped this practice and it is now down to Mick to request and send in this form on renewal and he will not receive a reminder. Remembering to follow these steps on renewal has reduced their premiums by £60 per month, although the provider will not entertain a retrospective refund for the couple of years Mick did not realise he was being charged IPT.
Vicky and her friends required travel insurance for a European holiday. As they booked through one particular operator, they opted for their travel insurance which was available online (through a third party provider). After obtaining a quotation, Vicky resisted the temptation to pay there and then. Instead, she called the provider giving her quotation reference and asked for the IPT to be deducted. After a little convincing and reference to their own website to prove the policy extends to Jersey, the provider was happy to take payment over the phone for the insurance cover less the IPT and the insurance policy was then emailed to Vicky.
Finally, Rob had experienced a few problems with hire cars. On one occasion he refuelled his hire car with the wrong type of fuel which turned out to be a costly mistake! He was also concerned that he would have a high insurance excess but felt the additional insurance available on the hire car desk seemed to him to be excessive (often referred to as Excess Waiver Insurance, Super CDW). As he was likely to hire other vehicles in the coming year he decided to look into an annual car hire excess insurance policy. He found one online that included £6,000 towards the hire car excess, £1000 towards misfuelling and other key benefits. Whilst ‘checking out’ he couldn’t see how IPT could be deducted. He sent the provider an email enquiry and they came back to him advising that if he took out the policy and sent them the policy number and the last 4 digits of the payment card used to pay for the policy, they would be happy to refund the IPT within 5 working days. Rob is now driving his hire car safe in the knowledge that he has comprehensive annual European car hire excess cover but also paid a reasonable price less the IPT!
Check out your insurance policies and let us know if you are paying unnecessary UK IPT. How much can you save?