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Do you pay vat on car insurance?

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In general, car insurance premiums in the United Kingdom are subject to Insurance Premium Tax (IPT) rather than Value Added Tax (VAT). IPT is a tax levied on general insurance premiums, including car insurance, and is collected by insurance companies from policyholders.

The current standard rate of IPT in the UK is 12%. However, there are certain types of insurance policies that are exempt from IPT, such as life insurance, permanent health insurance, and reinsurance.

It’s important to note that IPT is different from VAT. VAT is a tax applied to the sale of goods and services, whereas IPT specifically applies to insurance premiums. Therefore, when purchasing car insurance in the UK, you would typically pay IPT on the premium amount rather than VAT.

It’s always recommended to consult with your insurance provider or refer to the terms and conditions of your insurance policy to understand the specific tax implications and any additional charges that may apply to your car insurance premium.

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