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Cash receipt method

Before the rate rise contained in Finance Act 2017, there were no transitional accounting arrangements for insurers using the cash receipt method. If a premium, including an additional premium (AP), was received on or after the implementation date of the change in rate in respect of a taxable risk, IPT was due at the new rate. This would be the case even if the premium or AP related to a policy which related wholly to a period prior to that date.

Rate Rise from 1 June 2017

Following consultation with the industry, the rate rise on 1 June 2017 marked a change in approach to transitional arrangements. »Ê¹ÚÌåÓýapp rise should now apply in the same way to both cash receipt and special accounting scheme businesses.

»Ê¹ÚÌåÓýapp key determinants of whether the new rate applies to any premium received on after the date of the rate rise are:

• Does the premium relate to a risk for which the cover commenced on or after the rate rise date; or
• Notwithstanding the above test, is the premium received on or after the first anniversary of the rate rise date.