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V18.101 Introduction to IPT

Insurance premium tax (IPT) is charged on taxable insurance contracts¹ received on or after 1 October 1994² which cover risks located in the UK. There is no legal definition of insurance but HMRC regards insurance as the 'act, system, or business of providing financial protection against specified contingencies such as death, loss or damage. Life insurance is widely referred to as assurance although the words are interchangeable'³.

HMRC states, in Notice IPT1, that an insurance contract may display some or all of the following features:

1. Ìý

   •ÌýÌýÌýÌý a legally enforceable contract between the insurer and insured that identifies what is being insured

2. Ìý

   •ÌýÌýÌýÌý a premium is paid to the insurer by the insured for which the insurer indemnifies the insured against losses, the loss arising from one or more specified events

3. Ìý

   •ÌýÌýÌýÌý the insured party has an insurable interest in the insurance

4. Ìý

   •ÌýÌýÌýÌý the premium charged is calculated with reference to claims that insurer expects to meet from a pool of premiums

5. Ìý

   •