Can I Claim Insurance Premium Tax on my VAT Return? Insurance is something that you should not live without, or in this case, do business without, especially if you are in the United Kingdom. If you own a business in the United Kingdom, you probably already know what a premium insurance tax is all about. If you are reading this article, you are asking if I can claim insurance premium tax on my vat returns.
If you are asking this question, you are not alone, not even for a little bit. because there are plenty of other premium insurance tax holers that are asking the same question. The good news is that you have come to the right article and that question is going to be answered below for you to see. We are also going to take a deep look at what premium insurance is and how it works as well.
Can I Claim Insurance Premium Tax on my VAT Return?
Well, not to waste your time beating around the bush, the answer to this question, “Can I claim insurance premium tax on my vat return?” is no. No means it is very much impossible for you to claim insurance premium tax on my VAT return because that is not how it works. When completing your returns, it is very easy to make this mistake and think that you can, but you cannot.
The reason for this is the fact that it is not a Value Added Tax (VAT) return. Since it is not a VAT it means that it doesn’t blow on your VAT returns and therefore you can not claim or reclaim it in any way. That is not all because you need to know that all Insurance Premium Tax payments cannot be claimed at all. They simply belong to the insurance company and are unclaimable to us.
What is the Insurance Premium Tax?
An insurance premium tax, or IPT, is a type of tax on businesses that should be added to all general premium insurance in the United Kingdom. This means that if you have premium insurance for your business, you must pay the premium tax and it should be added to the other taxes. It is imposed by the United Kingdom government on every business that has a premium insurance policy.
What are the rates of Insurance Premium Tax?
The rate of the premium insurance tax is not calculated by the customer or the insurance company. This is because it is determined by the UK’s government. There are 2 different rates that apply to premium insurance. One is a standard of 12% that applies to many policy types, and the higher rate of 20%, applies to travel insurance, mechanical or electrical appliance insurance, and some vehicle insurance.
How do you pay Insurance Premium Tax?
Most of the time, you do not even know that you are paying a tax for getting premium insurance from an insurance company. But if you do, it is added or applied automatically to your premium insurance payment. This amount is a set amount which is normally either 12% or 20% of the cost of your premium insurance, just as we have seen above.
What this means is that when your insurance company gives you the cost of it, they have usually added the IPT tax to it. Your insurance company collects it and then makes the payment to the United Kingdom government on your behalf.
Are there any exemptions from the Insurance Premium Tax?
Not everybody has to pay a premium insurance tax because there are some instances where a business can be exempted. According to the UK’s giver website, below are a few exemptions for not paying your IPT:
- The majority of long-term insurance
- Re-insurance Insurance for commercial ships and aircraft.
- Insurance for commercial goods in international transit.
- Premiums for risks located outside the UK may be liable to similar taxes imposed by other countries.
Who pays the Insurance Premium Tax?
If you do not take a look at your tax returns, you might not know that you are paying an insurance premium tax. This is because the payment is added to the insurance premium for which you make the payment. Now, one question that remains is who pays the IPT. The short answer is that it is your insurance company that does so. However, they do so in a wide variety of ways for the UK government.
Is Premium Tax the Same as VAT?
VAT simply means value-added tax, which, of course, you do not pay. But with the insurance premium tax, you have to make payments for it. That being said, they are not the same thing. The insurance premium tax is imposed by the government. So the answer is no premium tax, the same as VAT because it doesn’t belong in your Vat.
Frequently Asked Questions
Can I claim back insurance premium tax in the UK?
The answer is no. You cannot claim back your insurance premium tax in the UK, unlike VAT. Your insurance premium tax can not be recovered.
Is there VAT on insurance premiums in the UK?
If your insurance supplier is within the United Kingdom, then it is subject to VAT. However, if it is outside the United Kingdom, then it is not subject to VAT.
What can I claim the VAT back on?
You can only claim the VAT back on travel expenses that relate to your business. For example, if your employee travels to visit a customer or to attend a trade show, you can claim VAT on it.
Can you claim the insurance on your tax return?
It is possible that you might be able to claim your car insurance if you use your vehicle in performing your job while running your business. You can claim the work-related percentage of your car insurance as a deduction if you use the logbook method.
Is private insurance tax deductible?
If you pay health insurance premiums out of your pocket for policies covering medical care then they are tax-deductible.