Finance Bill Tracking Service 2007 | Budget 2007 | Budget Notes

BN31 Insurance Premium Tax (IPT): amendment to the definition of a premium

Who is likely to be affected?

1   Insurers asserting that certain payments received in respect of taxable insurance contracts do not fall within the IPT definition of "premium".

General description of the measure

2   Legislation will be introduced in Finance Bill 2007 to clarify that the IPT definition of "premium" includes payments received by, or on behalf of, an insurer for a right to require the insurer to provide cover under a taxable contract of insurance.

Operative date

3   The measure will have effect on and after 22 March 2007.

Current law and proposed revisions

4   IPT is charged as an inclusive amount within the premium for a taxable insurance contract. Section 72 of Finance Act 1994 defines "premium" for IPT purposes as any payment received under a contract of insurance and certain specified payments related to it.

5   This measure will insert a new subsection 1B in section 72 to make it clear that the definition in that section includes any payment received in respect of a right to require an insurer to provide, or offer to provide, cover under a taxable contract of insurance.

Further advice

6   If you have any questions about this change, please contact the National Advice Service on 0845 010 9000. Information about Budget measures is available on the HM Revenue & Customs website at www.hmrc.gov.uk