What is Insurance Premium Tax (IPT)?

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Insurance Premium Tax (IPT), similar to Value Added Tax (VAT), is a tax applied by the government on insurance premiums. There are two rates of IPT, depending on the type of product covered by the insurance:

  1. 1

    a standard rate of 12%

  2. 2

    a higher rate of 20% for

    • travel insurance
    • certain insurance when sold with mechanical/electrical appliances
    • certain insurance when sold with some motor vehicles

Mobile phone insurance is subject to the standard rate of 12 per cent because mobile phones are classified predominantly as a communication device. However, connected device insurance is subject to the higher rate of 20 per cent because tablets and other connected devices are considered ‘electrical domestic appliances’ and not primarily a communication device. If you are an insurance customer, your monthly premium will include IPT at the prevailing rate. 

What is the history of IPT?

What is the history of IPT?

IPT was first introduced in 1997 by the UK government to raise additional revenue from the insurance sector. Since then, the standard rate of IPT has tripled:


    1 April 1997 – IPT was introduced at 4%


    1 July 1999 – IPT was increased to 5%


    4 January 2011 – IPT was increased to 6%


    1 November 2015 – IPT was increased to 9.5%


    1 October 2016 – IPT was increased to 10%


    1 June 2017 – IPT was increased to 12%

The higher rate of IPT, since introduced, has always been in line with VAT – currently at 20 per cent.

What is a multi-policy discount?

What is a multi-policy discount?

If you have insurance on two or more devices on the same account, you will benefit from a ten per cent multi-policy discount. This is applied to the total monthly insurance payment (premium + IPT). The prices will be the same as above, unless you're a small business customer with ten or more insured devices on the same account. 

Find more information on insurance for small business customers.

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