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:
- a standard rate of 12%
- 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% because mobile phones are classified predominantly as a communication device. However, connected device insurance is subject to the higher rate of 20% because tablets and other connected devices are considered ‘electrical domestic appliances’ and not primarily a communication device.