Category: Compliance & AML · Reviewed by Simon Temme, Account Executive · Last reviewed June 2026
The UK indirect tax on most general insurance premiums covering UK risks — charged at a standard rate (currently 12%) or higher rate (currently 20%) depending on the type of cover, collected by insurers from policyholders and remitted to HMRC.
Insurance Premium Tax (IPT) is a UK indirect tax payable on most general insurance premiums where the risk is located in the UK. It is paid by insurers (and by some intermediaries acting under specific authority) to HMRC, with the tax economically passed to the policyholder as a percentage uplift on premium. Different rates apply to different products.
Finance Act 1994, sections 48–74 and Schedules 6A and 7A. Implementing regulations include the Insurance Premium Tax Regulations 1994 (S.I. 1994/1774). HMRC public guidance covers operational and registration matters.
The standard rate of IPT (currently 12%) applies to most general insurance covering UK risks — motor, household, commercial property, liability, marine non-cargo, etc. The higher rate (currently 20%) applies to travel insurance, mechanical / electrical appliance insurance sold with the goods, and certain insurance sold with vehicles or financial products. Some classes are exempt — including reinsurance, long-term insurance (life and pension), insurance for international transport, certain spacecraft and lifeboats, and insurance for risks situated outside the UK.
The tax is charged on the gross premium (including any broker fees that are part of the consideration for the insurance). The “risk located in the UK” test depends on the type of risk — for property, where the property is situated; for vehicles, where the vehicle is registered; for travel, where the customer is habitually resident; for other risks, where the customer is established. Cross-border arrangements need careful analysis.
A commercial property insurance premium of £2,500 for a UK property attracts standard-rate IPT of £300 (12%), giving a gross premium to the customer of £2,800. A UK travel insurance premium of £100 attracts higher-rate IPT of £20 (20%), giving a gross premium of £120. Apex’s quotes show IPT separately on the customer documentation.
Finance Act 1994, sections 48–74 and Schedules 6A and 7A. Insurance Premium Tax Regulations 1994 (S.I. 1994/1774). HMRC IPT public guidance.
By Matt Bartlett, Director, on 2026-06-11.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-11. Apex Insurance Brokers Limited, FCA FRN 724952, Companies House 07014570. Not regulated advice — consult your broker on your specific position.
Apex Insurance Brokers serves UK professional services firms and commercial businesses. Call 0117 325 0027, email hello@apexinsurancebrokers.co.uk, or request a quotation.
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