Ins premium tax

moonpenny

I have just renewed my buildings and contents insurance other the same company I had last year.
I noticed on the breakdown of charges there is a Insurance Premium Tax of £16.30 which was taken as a separate amount out of my bank.
Can someone tell me what this is or should I be concerned?

Quentin

You pay IPT on insurance premiums (there is no VAT to pay though!)


All explained via a quick google.

agrinnall

IPT has been in place since 1994, and will have been charged on most insurance products you have purchased in the last 23 years.

moonpenny

Yes ,thank you both. Had a read about it on Google.

I knew I had paid it before but thought I should really question what it was for.

agrinnall

moonpenny wrote: »

...what it was for.

As with every other tax, it goes to fund government finances, see your personal tax statement for a rough guide to where the money is spent.

mattk_180

The above posts explain it clearly but I'm a little confused as to why they would take it as a separate transaction......... strange.

agrinnall

mattk_180 wrote: »

The above posts explain it clearly but I'm a little confused as to why they would take it as a separate transaction......... strange.

It might make it easier for them to hand it over to HMRC, they can simply move every IPT payment into a separate account as soon as it's paid, rather than having to split out of a total payment.

mattk_180

agrinnall wrote: »

It might make it easier for them to hand it over to HMRC, they can simply move every IPT payment into a separate account as soon as it's paid, rather than having to split out of a total payment.

You're explanation is certainly logical and feasible, I've just never seen it done like that before.

ThinkingOutLoud_2

mattk_180 wrote: »

You're explanation is certainly logical and feasible, I've just never seen it done like that before.

Hmm, I wonder if this has something to do with the insurer's systems having to handle the new rate of IPT. There are some transitional complexities too which maybe their systems could not handle and so they calculate / break it out separately - but unusual for sure.

So nothing to do with the OP's policy and no concern, if they are charging the right sum.

You could ask them why...