Answers · UK 2025/26
What is Insurance Premium Tax in the UK for 2026?
Insurance Premium Tax (IPT) is a tax on general insurance premiums paid by insurers but passed to policyholders. For 2026/27 the standard rate is 12% on most general insurance (home, motor, pet). A higher rate of 20% applies to travel insurance, mechanical or electrical appliance insurance, and some vehicle warranties. Life assurance and most long-term insurance is exempt.
Full answer
Insurance Premium Tax (IPT) was introduced in 1994 and is charged on general insurance premiums. It is collected by the insurer and remitted to HMRC, but the cost is invariably passed to policyholders in their premiums. IPT is governed by Finance Act 1994. **2026/27 IPT rates:** | Rate | Applies to | |---|---| | **Standard rate: 12%** | Home insurance, motor insurance, pet insurance, liability insurance, most commercial insurance | | **Higher rate: 20%** | Travel insurance, mechanical and electrical appliance insurance (extended warranties), some vehicle warranties | **Exempt from IPT:** - Life assurance and income protection insurance - Long-term care insurance - Most permanent health insurance - Reinsurance - Insurance for ships, aircraft, and certain commercial vehicle risks - Export credit insurance **IPT vs VAT:** IPT is not VAT and cannot be reclaimed by businesses as input tax. Insurers submit IPT returns quarterly to HMRC. **History of rate increases:** | Year | Standard rate | |---|---| | 1994 | 2.5% | | 1997 | 4% | | 1999 | 5% | | 2011 | 6% | | 2015 | 9.5% | | 2016 | 10% | | 2017 | 12% | | 2026/27 | 12% (unchanged) | The UK IPT standard rate (12%) is higher than most EU equivalents, where rates range from 2% to 10%. **Practical impact:** On a typical home insurance premium of £300, standard-rate IPT adds £36. On travel insurance of £200, the higher rate adds £40. IPT is one reason UK car and home insurance premiums appear high in international comparisons.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.