Tax on insurance.

[pmanson]

Hi,

Trying to finish a uni assignment, can any one tell me what % tax is levied on insurance. I know its exempt of VAT @ 17.5% and the figure i've found for tax is 5% is that correct?


Thanks,

Phill

[Eric Mc]

Insurance premiums are subject to Insurance Premium Tax (IPT). There are two rates - 17.5% and 5%. I'm not sure to what types of policies the two rates of tax relate.

Unlike VAT, IPT is never recoverable.

[pmanson]

Eric Mc said:

Insurance premiums are subject to Insurance Premium Tax (IPT). There are two rates - 17.5% and 5%. I'm not sure to what types of policies the two rates of tax relate. Unlike VAT, IPT is never recoverable.

Thanks Eric, that confims what I thought,

My Assignment said:

9)VAT on all purchases, excluding Insurance, is calculated at 17.5%. All VAT on sales is to be calculated at 17.5%

The assignment is badly worded.


Cheers,

Phill

[2 sMoKiN bArReLs]

VAT can also be 5%, & 0%

[2 sMoKiN bArReLs]

The 17.5% IPT was to get round VAT avoidance wheezes.

[2 sMoKiN bArReLs]

There can be scanarios when VAT is levied on insurance too.

I reckon. If insurance is recharged by, say your landlord, then VAT can be levied. But: I'm not 100% sure of that.

[2 sMoKiN bArReLs]

2 sMoKiN bArReLs said:

The 17.5% IPT was to get round VAT avoidance wheezes.

In the old days, buy the product for £50, and the warranty for £150 & pay vat on the £50 element only. Was quite common to shift pricing from goods to warranty.

[pmanson]

The insurance according to the assignment is for:

The assignment said:

Insurance costs covering public liability, property, equipment and fixtures and fittings

[2 sMoKiN bArReLs]

pmanson said:

The insurance according to the assignment is for: The assignment said: Insurance costs covering public liability, property, equipment and fixtures and fittings

I reckon that'll be at 5% then.

[Eric Mc]

IPT relates to genuine "Insurance". VAT is charged on "warranties" and other such guarantee schemes which aren't really insurance in the normal sense.

The official rates of VAT are:

Standard - 17.5%
Zero Rated
5% is charged on some special items such as domestic power
Exempt (which is not the same as "Zero"
Outside the Scope

Insurance is normally described as being "Exempt" for VAT.

[2 sMoKiN bArReLs]

Eric Mc said:

IPT relates to genuine "Insurance". VAT is charged on "warranties" and other such guarantee schemes which aren't really insurance in the normal sense.

Yep, but the 17.5% IPT is on insurance backed warranties. (You said you were unsure above)

[Eric Mc]

It gets complicated doesn't it.

Even the VAT authorities aren't always sure what type of insurance "animal" they are looking at.
Quite a few of the large retailers (Dixons, for instance) have had to duke it out with the VAT man over the nature of various guarantee schemes they were offering to customers.

[2 sMoKiN bArReLs]

How many VAT rates have there been?

I can remember 8%, 25%, 12.5%, 15%, 17.5% 0%, 5%

[Eric Mc]

VAT was introduced in 1973. I started work (in Ireland) in 1976 so between 1976 and 1986 (the year I came to the UK) I am more familiar with the Irish rates.

Britain has one of the simpler VAT systems in Europe (I kid you not).

[2 sMoKiN bArReLs]

Eric Mc said:

VAT was introduced in 1973. I started work (in Ireland) in 1976 so between 1976 and 1986 (the year I came to the UK) I am more familiar with the Irish rates. Britain has one of the simpler VAT systems in Europe (I kid you not).

I thought in Eire VAT was where one kept one's moonshine!

[Eric Mc]

Poteen Moonshine is American.

[insurance_jon]

travel and engineering policies = 17.5%
all others 5% if bought direct or through a broker.

Vat is charged on all if bought through a vat registered company that isn't a broker or an insurer.