Tax Setup

Introduction

Tax is charged on insurance premiums and settled to the appropriate countries’ (tax jurisdiction) tax authorities. Different tax jurisdictions have different rates of tax and methods of handling taxes.

In the United Kingdom the tax charged on insurance is called ‘Insurance Premium Tax’ (IPT). IPT in the UK is (at the time of writing) charged at 12% for most classes of business and 20% for a subset. The tax is payable by the Insured and settled by the Insurer. Therefore the tax is charged in addition to premium. A basic example is:

Gross Premium	£1,000
IPT	£120

The key items to be aware of for differences in international taxes are:

• A single jurisdiction can charge multiple taxes on the same premium (e.g. Ireland charges at least 2 taxes on insurance premiums).

• Taxes can either be charged as a percentage (e.g. 12% of premium), a fixed value (e.g. a fixed €10 charge) or another method (e.g. 11 cents per € where the premium is greater than €100). The method of charging is at the discretion of the jurisdiction.

• Taxes can be charged on top of premium, or as a deduction from premium. What dictates this is who is responsible for paying the tax, and who is responsible for administering the tax. The two most common methods are:

  • Tax in addition to premium:

    • Taxes payable by: Insured

    • Taxes administered by: Insurer

  • Tax as a deduction from premium:

    • Taxes payable by: Insurer

    • Taxes administered by: Insured (or their Agent/Broker)

• Tax rates can vary by class of business (e.g. UK IPT)

• A single policy can be split across multiple tax jurisdictions. In this scenario the user carries out a ‘tax split’ where they proportionally split a risk across applicable territories. For example, a £1,000 general liability risk split 50/50 between the UK and Ireland would attract the following taxes:

  • UK: £60 IPT (12% of 50% of 1,000)

  • Ireland 1: £15 Government levy (3% of 50% of 1,000)

  • Ireland 2: £10 Insurance Compensation Fund (ICF) Levy (2% of 50% of 1,000)

• In certain countries (e.g. USA, Canada & Australia) tax can be charged at State level as well as/instead of country level.

Umbraco Setup

The tax rates applicable for each instance of Insureflow are set up in the ‘Tax Vault’ in Umbraco. Against these taxes set up includes:

	TO DO