Dear brokers,
Insurance Premium Tax was introduced in the Finance Act of 1994 and under section 72 is payable on any premium due under a taxable insurance contract.
In the Pre Budget Report of 2009 the Chancellor announced an intention to close a loophole that has existed to avoid paying this tax in certain cases.
New legislation is proposed to address this and will be retrospective to 9th December 2009. The legislation is intended to close an avoidance scheme involving an “administration fee” charged under a separate contract.
Our administration fees have always been charged as part of the main contract of insurance and as such we believe that the existing arrangements can legally continue and that the changes proposed do not affect our existing arrangements.
We will of course be watching developments and should our interpretation be proved incorrect we will advise all our agents as soon as possible.
We would point out that the changes are currently only proposed legislation that is of course subject to change/rejection during its passage through Parliament and thus may not even eventually become law.
The Editor
