Insurance Premium Tax (IPT) calculator
Calculate the Insurance Premium Tax component of a UK insurance premium. IPT is charged at 12% (standard rate) or 20% (higher rate). Some policies are exempt.
Calculation direction
IPT rate for this policy type: 12% (standard rate)
Assumptions and methodology
Standard rate IPT: 12% on most general insurance. Higher rate IPT: 20% on travel insurance sold with goods, domestic appliance insurance, some vehicle insurance sold with vehicles, and mechanical/electrical appliance cover. Exempt: life insurance, income protection, commercial ships and aircraft insurance. Source: HMRC.
Common mistakes to avoid
- ✕Assuming all insurance carries the same IPT rate — travel insurance bundled with goods or services attracts 20%.
- ✕Applying IPT to life insurance or income protection premiums — these are exempt.
- ✕Confusing gross premium (including IPT) with net premium (excluding IPT).
Frequently asked questions
IPT is a UK tax on general insurance premiums. It is not VAT. The standard rate is 12% and the higher rate is 20%. Insurers pay IPT to HMRC — it is included in the premium you pay as a policyholder.
Life insurance, income protection insurance, and permanent health insurance are exempt from IPT. Commercial ships and aircraft insurance is also exempt. Reinsurance is not subject to IPT.
The 20% higher rate applies to: travel insurance sold with linked goods or services; vehicle insurance sold with a vehicle; domestic appliance or electronic device insurance; and mechanical and electrical appliance insurance.
Related calculators
Sources
- HMRC — Insurance Premium Tax rates (verified April 2026)
Disclaimer
This is a simplified estimate based on the assumptions shown above. It isn't a quote, and a real insurer may arrive at a different figure. Use it as a starting point, then check the details with your insurer or adviser.