Most types of general insurance are subject to insurance premium tax (IPT), while life insurance, pensions and income protection insurances are not. The premium quoted by the insurer will include the tax where necessary.

You are not able to set IPT paid by you against VAT on the goods and services you sell to others. If you sell cars, electrical or domestic appliances, or holidays, and you also arrange insurance for your customers, then in certain circumstances you may be liable to administer IPT yourself.

You should ask your accountant, tax adviser or HM Customs and Excise for details if necessary.

Insurance premium tax is currently 5%.