Despite the fact that Insurance Premium Tax (IPT) was first introduced in the United Kingdom on 1st October 1994, we still get enquires asking, "What is this Insurance Premium Tax on the quote I’ve just received"?
As the name implies this is a tax on insurance. IPT started life at a rate of 2.5%, which when calculated in relation to the charge we make for insurance cover was quite an insignificant sum. Indeed at the now current rate of 10% the charge is still not a king’s ransom.
"So how come your quote shows IPT, but the quote I’ve received from your competitors makes no mention of this tax"?
We must admit this did confuse us when we first heard this question, perhaps we are charging for something that we should not, or is this a defunct tax that no longer applies. A little investigation revealed the answer that appears to say that as a reseller of an insurance premium, or more correctly an insurance arrangement fee, a household removal company doesn’t necessarily have to show the IPT as a separate item on quotes or invoices, but must still collect the IPT on insurances. You would still be paying the same if we did things like this, but the actual Insurance cost to you would be slightly more to allow for the IPT.
At the end of the day our role with regard to IPT is to collect same and hand over in a similar way to which we do VAT, that other tax we have to collect in behalf of the government. We are, to be quite blunt about it, unpaid tax collectors.
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