IPT on refunds of premiums due to the COVID-19 pandemic
This article is to update the Lloyd’s market in respect of IPT on refunds of premiums due to the COVID-19 pandemic.
Lloyd’s Tax Department are aware that some insurers are offering refunds of premium to policyholders due to the ongoing COVID-19 pandemic. HMRC have informed us that, in one example, a motor insurer is offering a fixed payment to all motor customers due to a reduction in claims.
HMRC’s view is that in some circumstances such payments may not qualify for IPT credits, for example where the refunds are not specifically linked to or made under the contract of insurance.
We advise any Lloyd’s underwriter or agent considering offering policyholders a refund of premium due to the COVID-19 pandemic to have due regard to the above and the current wording of the insurance contract/slip when structuring refunds, and we would be happy to discuss this further if it would be useful.
For clarity this notice is for general information and we are not yet aware of any specific issues with HMRC on this subject within the Lloyd’s Market, or any similar issues with overseas tax authorities. Should any managing agent have additional information we would be grateful if this could be passed on to us.
For more information and for the latest guidance and updates in relation to COVID-19, please visit Lloyd’s COVID-19 information hub.