galwaygreen
Member Since: 30 Oct 2011
Location: plymouth
Posts: 6525
  
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| extended warranty and insurance premuim tax |
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what rate are people paying 12 or 20 percent on this
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 15th Dec 2017 10:11 pm |
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Scott #55
Member Since: 15 Apr 2015
Location: UK
Posts: 1683
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IPT is 12%. VAT is 20%.
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| 15th Dec 2017 10:33 pm |
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galwaygreen
Member Since: 30 Oct 2011
Location: plymouth
Posts: 6525
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IPT can also be 20 percent hence the question,,,there are 2 rates
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| 15th Dec 2017 11:01 pm |
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BBDisco3
Member Since: 23 Nov 2008
Location: Cheshire
Posts: 3646
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20% IPT rate applies to travel insurance. 
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| 15th Dec 2017 11:46 pm |
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galwaygreen
Member Since: 30 Oct 2011
Location: plymouth
Posts: 6525
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yes agree...also mechanical/electrical appliance insurance and certain VEHICLE INSURANCE...I think mobile phone insurance
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| 15th Dec 2017 11:50 pm |
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BBDisco3
Member Since: 23 Nov 2008
Location: Cheshire
Posts: 3646
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Basically, if the insurance is sold by the supplier of the goods (or connected to the supplier) then the 20% rate would apply.
This generally being a motor trader selling insurance/warranty on a car or a mechanical/electrical breakdown firm who also supply the products.
A car dealer selling GAP do so at the lower rate of 12% as it covers the financial aspect rather than the goods supplied.
Mobile phone companies supply the goods so breakdown/warranty is at the higher rate.
Insurance (other than travel) sold by an insurer or broker is at the lower rate as neither provide the goods which are being insured.
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| 16th Dec 2017 12:27 am |
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Scott #55
Member Since: 15 Apr 2015
Location: UK
Posts: 1683
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galwaygreen wrote:IPT can also be 20 percent hence the question,,,there are 2 rates
Thanks - wasn’t aware of that. Thievery.
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| 16th Dec 2017 10:15 am |
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galwaygreen
Member Since: 30 Oct 2011
Location: plymouth
Posts: 6525
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thanks brian for that clarification.....then theres VAT on toilet rolls,,,......robbers
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| 16th Dec 2017 9:24 pm |
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BBDisco3
Member Since: 23 Nov 2008
Location: Cheshire
Posts: 3646
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The 20% on travel insurance came about due to "VAT avoidance" through "price shifting"
It was a known fact that travel agents would discount a holiday to save the vat element but then load the travel insurance premium by the same amount. This resulted in avoidance of paying the higher rate VAT on the holiday in favour of the lower rate IPT. It didn't benefit the customer as they still paid the same total.
You may remember some travel deals were only given if you took the insurance via the travel agent.
This resulted in IPT on travel insurance being increased in line to the VAT rate.
There was much debate at the time as it was thought the increase in premium may deter some from taking travel insurance.
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| 18th Dec 2017 12:04 am |
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RichardE
Member Since: 24 Apr 2007
Location: Ongar
Posts: 15
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Extended Warranty business is further complicated because firms like Motoreasy don't charge IPT because they are not selling an insurance product. They are selling a "discretionary" service plan not regulated by the FCA, so therefore charge VAT at the normal 20%.
I had this confirmed by them a couple of months ago. MY12 HSE
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| 19th Dec 2017 3:14 pm |
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BBDisco3
Member Since: 23 Nov 2008
Location: Cheshire
Posts: 3646
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So they are not FCA regulated 
You pay your money and take your chance
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| 19th Dec 2017 3:59 pm |
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James W
Member Since: 27 Mar 2008
Location: Riyadh, KSA
Posts: 3079
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This has come up before. The FCA will regulate the firm and any relevant licencing but with regards to an individual dispute over payouts, etc. (which I guess is the common thing) they will direct you to the Financial Ombudsman Service to mediate (generally, for 1 to 1 complaints)
FOS were, by their own admission unable to make Warranty Direct do anything after reviewing my case for several months. They were a toothless tiger in my experience.
Being FCA regulated can only be a 'good thing'. I would just be weary about what expectations that raises in your mind. D4 XS, gone, much loved, never forgotten
2018 FFRR SDV8 Autobiography - Gone to someone with less sense and more time to enjoy it 
2016 Toyota Hilux Invincible - Liberating experience
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| 19th Dec 2017 4:29 pm |
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RichardE
Member Since: 24 Apr 2007
Location: Ongar
Posts: 15
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I didn't want to rake over hot coals!!
The OP asked a question about the rate of IPT on extended warranty. I just pointed out that some extended warranty business doesn't attract IPT at all, but VAT is charged. These are very different taxes, including the fact that VAT is recoverable for VAT registered businesses, as opposed to IPT which is not.
The main deciding factor whether VAT or IPT is charged is whether the product is FCA regulated or not, which is why I mentioned it, not to stir things up! MY12 HSE
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| 19th Dec 2017 4:47 pm |
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James W
Member Since: 27 Mar 2008
Location: Riyadh, KSA
Posts: 3079
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Didn't think you were raking anything up. I was just responding to this view:
BBDisco3 wrote:You pay your money and take your chance
...as I don't think FCA regulation is the be all and end all that some may think it to be, especially for warranty companies that are notorious for turning down claims. As is the case further up the thread. D4 XS, gone, much loved, never forgotten
2018 FFRR SDV8 Autobiography - Gone to someone with less sense and more time to enjoy it
2016 Toyota Hilux Invincible - Liberating experience
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| 19th Dec 2017 5:43 pm |
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BBDisco3
Member Since: 23 Nov 2008
Location: Cheshire
Posts: 3646
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You are forgetting the protection under the Financial Services Compensation Scheme which also protects the premiums you have paid to an FCA authorised firm.
Its not just about claims
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| 19th Dec 2017 5:57 pm |
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