Policy paper

Insurance Premium Tax - power to make regulations by references to notices

Published 15 March 2023

Who is likely to be affected

This measure will affect insurance providers liable to be registered for Insurance Premium Tax (IPT).

General description of the measure

This measure will broaden existing powers, and this will allow HMRC to move IPT forms from secondary legislation and into a public notice by way of a statutory instrument.

Policy objective

This measure is intended to provide an administrative facilitation. This will improve efficiency, enabling HMRC to amend IPT forms without the need to legislate, and to prepare for any potential future digitisation in line with wider government strategy. This will ensure HMRC will be able to respond quickly when changes are required.

Background to the measure

An IPT consultation with the insurance industry, launched on 5 November 2020, suggested policy proposals intended to prevent unfair outcomes and improve the administration of the tax for both the industry and HMRC. The consultation closed on 5 February 2021.

The summary of responses to the consultation was published on 30 November 2021. At that time, the government announced its intention to remove the IPT forms from secondary legislation, to make the tax easier to administer. This measure takes that commitment forward.

Detailed proposal

Operative date

The measure will have effect on and after the date of Royal Assent of Spring Finance Bill 2023.

Current law

Part 3 of the Finance Act 1994 provides for the charge to IPT and contains various powers to make regulations for the administration of the tax. The IPT regulations 1994 (SI1994/1774) were made pursuant to Part 3 of the Finance Act 1994. The Schedule to these Regulations contains 6 forms to be used by the taxpayer to provide certain information required for the administration of IPT.

Proposed revisions

This measure broadens existing powers in primary legislation (Part 3 of the Finance Act 1994) by inserting new subsection (6A) into section 74, to permit regulations made under Part 3 of the Act to make provision by reference to a notice published by HMRC. HMRC intends to use the power soon after Royal Assent to move forms used in the administration of IPT from secondary legislation into a public notice.

Summary of impacts

Exchequer impact (£m)

2022 to 2023	2023 to 2024	2024 to 2025	2025 to 2026	2026 to 2027	2027 to 2028
Nil	Nil	Nil	Nil	Nil	Nil

This measure is not expected to have an Exchequer impact.

Economic impact

This measure is not expected to have any significant economic impacts.

Impact on individuals, households and families

There are expected to be no impacts for individuals, households and families as this measure is an administrative simplification of the process of updating IPT forms.

Equalities impacts

It is not expected that there will be adverse effects on any group sharing protected characteristics.

Impact on business including civil society organisations

This measure is not expected to impact on businesses and civil society organisations. This is an administrative simplification of the process of updating IPT forms and there are no imminent plans to change the forms. Further work to assess the impact will be carried out if any changes to the forms are proposed. HMRC has committed to consulting with the insurance industry, where possible, before any significant changes to the forms are made.

Operational impact (£m) (HMRC or other)

This measure is not expected to have an operational impact.

Monitoring and evaluation

Not applicable.

Further advice

If you have any questions about this change, please contact Pete Fontaine on telephone: 03000 568851 or email: [email protected].