VAT on Insurance in the UK: Understanding IPT and Exemptions

• Insurance in the UK is usually exempt from VAT, so insurers normally do not charge VAT on premiums.
• Instead, many insurance premiums are subject to Insurance Premium Tax (IPT), which is a separate tax and cannot be reclaimed like VAT.
• IPT typically applies at 12%, with a 20% rate for some policies such as travel insurance and certain add-on insurance.
• Some insurance types are exempt from IPT, including many long-term policies, reinsurance, certain ship/aircraft cover, goods in international transit, and risks outside the UK.
• VAT can still apply to separate insurance-related services, so the exact tax treatment depends on the nature of the charge.

Source: deeksvat.co.uk

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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