A UK company takes out D&O cover for the directors of a UK company and its Australian subsidiary. Two of the directors of the UK company are also directors of the Australian subsidiary. The UK Insurance Premium Tax (IPT) position is as follows:
- Premium attributable to individuals who are directors of the UK company only – taxable.
- Premium attributable to individuals who are directors of the Australian company only – exempt from UK IPT.
- Premium attributable to individuals who are directors of both companies – the premium has to be apportioned and the part attributable to the UK company is subject to UK IPT.
The establishments are the company and its Australian subsidiary, not its directors. There is also an exposure to tax in relation to the Australian risk that must be addressed.
