Insurance Premium Tax set to rise by 0.5%

The chancellor, George Osbourne has announced that there will be another increase to insurance premium tax by 0.5%, making the tax 10%.

In July 2015, it was announced the tax would be increased from 6% to 9.5% which came into effect in January.

The new standard rate of IPT will be due on insurance premiums treated by the legislation as received on or after 1 October 2016, except where insurers operate a special accounting scheme. From 1 February 2017, the new rate applies to all premiums, regardless of when the contract was entered into.

Insurance Premium Tax is charged on a range of insurances including private medical insurance.

The chancellor has advised all extra money raised will be committed to flood defence spending to help support areas including Leeds, York, Calder Valley and Cumbria.