Increase in IPT from 01.11.15

09 July 2015 09:13

You may have seen in the budget that IPT is increasing from 6% to 9.5% from 01.11.15. Is there some guidance that you have on how to implement this change in schemeserve - we were not on the system when there was a last increase in IPT so not sure how the transitional period was managed by your users that time around. I am particularly interested in how to manage the overlap period on our quote and buy i.e. quotes that are given before the 01.11.15 with IPT at 6% but where a start date after 01.11.15 is subsequently selected by the client thus pushing them into the 9.5% charge.

Kind Regards

Amanda

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8 comments

Mark Williams 09 July 2015 09:23

This could be solved by introducing "On Cover" rules and/or matrix. This would allow the IPT to be changed when cover is requested dependant upon the inception date. This would be useful in other areas too.

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Colin Kippin 09 July 2015 09:27

Hi Amanda,

We are currently awaiting a clarification of the exact rules to apply from BIBA - we are assuming that the change is effective date based but need to check that its not processing date.

Once we have the final details we will be issuing some guidance notes as to the changes that you need to make to your Schemes so that you can process New Business, Adjustments and Renewals correctly.

We will also need to look at the scenario you mention above assuming its inception date based where a quote was given at 6% but as the new inception date is after 1st Nov it now needs to be closed off at 9.5%

Regards

Colin

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Amanda Kelly 09 July 2015 09:33

Thanks Mark for your thoughts - just not sure how to manage giving the customer another quote if they need one at the higher rate - presume that all cases where quotes were given before 01.11.15 but where they try to put a case On Cover after the 01.11.15 will need to refer back for a requote perhaps.

Colin

An extract from the budget is as below:

'Indirect taxes

Insurance premium tax standard rate – From 1 November 2015, the standard rate of insurance premium tax (IPT) will be increased by 3.5 percentage points to 9.5%. From this date all premiums received by insurers using the IPT cash accounting scheme will be charged at 9.5%. For insurers using the special accounting scheme, there will be a 4 month concessionary period that will begin on 1 November 2015 and end on 29 February 2016, during which premiums received that relate to policies entered into before 1 November 2015 will continue to be liable to IPT at 6%. From 1 March 2016 all premiums received by insurers will be taxed at the new rate of 9.5%, regardless of when the policy was entered into. (Summer Finance Bill 2015) (19)'

Not sure if this helps!

Look forward to hearing further in due course.

Amanda

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Natalie Williams 09 July 2015 10:30

This is where rules based on inception date would be invaluable.

We will all need a rule to set the IPT rate to the higher value. This can be added under the On Cover status.

The rule by case inception date (and record inception date) is becoming more and more necessary.

Thanks

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Colin Kippin 09 July 2015 11:01

We will look at all solutions shortly, Rules is one possible solution but there are others revolving around Taxes in general.

Will report back with proposed solutions as soon as we can

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Amanda Kelly 01 September 2015 10:01

Morning Colin

Just wondered whether we were any closer to a solution for this as we are now only a month away from needing to implement something - as we can issue policies 30 days in advance.

Regards

Amanda

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Colin Kippin 02 September 2015 09:38

Hi Amanda,

We have completed this work and it was included in the most recent release.

There will be some rules that you need to create to set the new rates - we will be releasing an instruction video to all users in the next couple of days so that you can get these in place.

Regards

Colin

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Permanently deleted user 07 September 2015 07:57

A video showing you how to set your rules up that has been sent to all site owners is below.

https://www.youtube.com/watch?v=WdJdgFYsVYM

Any question please either raise a support ticket or give the helpline a call.

Kind regards

Adam

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