Budget 2010 – Insurance Premium Tax
HMRC are to block an avoidance scheme used by certain businesses; it involves splitting the premium for insurance contracts. The new legislation will take effect for fee payments received on or after 24 March 2010.
The legislation seeks to block the situation whereby individuals are charged an ‘administration fee’ under a separate contract thereby reducing the amount of insurance premium tax payable.
The 2009 Pre-Budget report announced measures which have now been replaced by new draft legislation to better target avoidance. The new draft legislation together with an explanatory note has been published by HMRC. It is expected that HMRC will publish more detailed guidance shortly.