CE10

9 March 1999

INSURANCE PREMIUM TAX

The standard rate of Insurance Premium Tax (IPT) is to rise by 1
percentage point from 1 July 1999. IPT applies to most general
insurance (eg. motor and household). However 80 per cent of premiums
underwritten in the UK will remain exempt from IPT, including life
and most other long term insurance.

The rate of UK IPT remains one of the lowest in Europe.

NOTES FOR EDITORS

1. The new rate of 5 per cent for the majority of general insurance
is one of the lowest overall rates of IPT in the European Union. For
example, on household insurance Austria has a rate of 11 per cent,
Belgium 9.25 per cent, Finland 22 per cent, France 9 per cent,
Germany 14 per cent, Greece 10 per cent and Italy 21.25 per cent.

2. In many cases where contracts commence before 1 July 1999, the
premium may not be written into the insurer's records until after
that date. In line with the arrangements that were negotiated and
agreed with the insurance industry in 1995, there will be a
concessionary period up to 31 December 1999 during which insurers may
account for IPT at the old rate (4 per cent), even when it is written
into the insurer's records after 1 July 1999. There are also
provisions to prevent loss of revenue to the Exchequer caused by
forward buying before the rate rise.

3. Details for insurers and others affected are in Budget Notice
41/99, which is available from Customs & Excise Business Advice
Centres and from the Customs & Excise Internet site.

Press enquiries only to HM Customs and Excise, Public Relations
Office, New King's Beam House, 22 Upper Ground, London SE1 9PJ.
Telephone: 0171 865 5471/5472.

Others should contact their local VAT Business Advice Centre, listed
under Customs and Excise in the telephone book

Customs and Excise Internet address:
www.hmce.gov.uk

This news release can also be found at :
http://www.hm-treasury.gov.uk

Other Treasury material can also be found at this address.

# = pounds sterling