Insurance Premium Tax

Insurance Premium Tax (IPT) is a government-introduced tax on insurance policies including car, home, travel and pet which every insurance provider has to charge. IPT is charged Only if there is a premium under a taxable insurance contract.

A taxable insurance contract is one with a: 1. premium 2. Insured indemnified against a loss 3. Insured has an insurable interest. [Prudential case]

The definition of Premium payment includes payment for risks, commission, admin, taxes, interest etc.

IPT may not be charged if the contract is a separate insurance contract ie separately disclosed & client has a choice etc.

Once you decide that IPT is chargeable, you need to figure out the rate: std, higher, exempt & calculate the IPT chargeable.