Finance Act 1994

The basic provisionsU.K.

48 Insurance premium tax.U.K.

(1)A tax, to be known as insurance premium tax, shall be charged in accordance with this Part.

(2)The tax shall be under the care and management of the Commissioners of Customs and Excise.

49 Charge to tax.U.K.

Tax shall be charged on the receipt of a premium by an insurer if the premium is received—

(a)under a taxable insurance contract, and

(b)on or after 1st October 1994.

50 Chargeable amount.U.K.

(1)Tax shall be charged by reference to the chargeable amount.

(2)For the purposes of this Part, the chargeable amount is such amount as, with the addition of the tax chargeable, is equal to the amount of the premium.

(3)[F1Subsections (1) and (2)] above shall have effect subject to [F2sections 69 and 69A] below.

[F351 Rate of tax.U.K.

(1)Tax shall be charged—

(a)at the higher rate, in the case of a premium which is liable to tax at that rate; and

(b)at the standard rate, in any other case.

(2)For the purposes of this Part—

(a)the higher rate is [F420 per cent]; and

(b)the standard rate is [F512 per cent].]

[F651A Premiums liable to tax at the higher rate.U.K.

(1)A premium received under a taxable insurance contract by an insurer is liable to tax at the higher rate if it falls within one or more of the paragraphs of Part II of Schedule 6A to this Act.

(2)Part I of Schedule 6A to this Act shall have effect with respect to the interpretation of that Schedule.

(3)Provision may be made by order amending Schedule 6A as it has effect for the time being.

(4)This section is subject to section 69 below.]

52 Liability to pay tax.U.K.

(1)Tax shall be payable by the person who is the insurer in relation to the contract under which the premium is received.

(2)Subsection (1) above shall have effect subject to any regulations made under section 65 below.

[F752A Certain fees to be treated as premiums under higher rate contracts.U.K.

(1)This section applies where—

(a)at or about the time when a higher rate contract is effected, and

(b)in connection with that contract,

a fee in respect of an insurance-related service is charged by a taxable intermediary to a person who is or becomes the insured (or one of the insured) under the contract or to a person who acts for or on behalf of such a person.

(2)Where this section applies—

(a)a payment in respect of the fee shall be treated for the purposes of this Part as a premium received under a taxable insurance contract by an insurer, and

(b)that premium—

(i)shall be treated for the purposes of this Part as so received at the time when the payment is made, and

(ii)shall be chargeable to tax at the higher rate.

(3)Tax charged by virtue of subsection (2) above shall be payable by the taxable intermediary as if he were the insurer under the contract mentioned in paragraph (a) of that subsection.

(4)For the purposes of this section, a contract of insurance is a “higher rate contract” if—

(a)it is a taxable insurance contract; and

(b)the whole or any part of a premium received under the contract by the insurer is (apart from this section) liable to tax at the higher rate.

(5)For the purposes of this Part a “taxable intermediary” is a person falling within subsection (6) [F8or (6A)] below who—

(a)at or about the time when a higher rate contract is effected, and

(b)in connection with that contract,

charges a fee in respect of an insurance-related service to a person who is or becomes the insured (or one of the insured) under the contract or to a person who acts for or on behalf of such a person.

[F9(6)A person falls within this subsection if the higher rate contract mentioned in subsection (1) above falls within paragraph 2 or 3 of Schedule 6A to this Act (motor cars or motor cycles, or relevant goods) and the person is—

(a)within the meaning of the paragraph in question, a supplier of motor cars or motor cycles or, as the case may be, of relevant goods; or

(b)a person connected with a person falling within paragraph (a) above; or

(c)a person who in the course of his business pays—

(i)the whole or any part of the premium received under that contract, or

(ii)a fee connected with the arranging of that contract,

to a person falling within paragraph (a) or (b) above.

(6A)A person falls within this subsection if the higher rate contract mentioned in subsection (1) above falls within paragraph 4 of Schedule 6A to this Act (travel insurance) and the person is—

(a)the insurer under that contract; or

(b)a person through whom that contract is arranged in the course of his business; or

(c)a person connected with the insurer under that contract; or

(d)a person connected with a person falling within paragraph (b) above; or

(e)a person who in the course of his business pays—

(i)the whole or any part of the premium received under that contract, or

(ii)a fee connected with the arranging of that contract,

to a person falling within any of paragraphs (a) to (d) above.]

(8)For the purposes of this section, any question whether a person is connected with another shall be determined in accordance with [F10section 1122 of the Corporation Tax Act 2010] .

(9)In this section—

• “insurance-related service” means any service which is related to, or connected with, insurance;

• F11. . .]