Insurers preparing for increased premium taxes in the United Kingdom have been given some flexibility in how they file their returns to the government, the Association of British Insurers announced Friday.
The U.K. insurance premium tax will increase to 9.5% from the current 6% for coverage bought on or after Nov. 1. U.K. Chancellor of the Exchequer George Osborne had announced the tax increase in July as part of his summer budget.
“Firms are already working flat out to update (information technology) systems and prepare for the change,” the ABI said in a statement. The association said Her Majesty's Revenue & Customs department has confirmed that companies “facing challenges providing accurate IPT returns as a result of the change in rate can discuss with HMRC the provision of estimates for initial accounting periods instead. Adjustments will be made at a later date.”
“Firms had no advance warning of the increase in insurance premium tax announced in the Budget, meaning preparations for the implementation date of Nov.1 have placed sudden pressure on IT and back-office services,” said David Jordorson, ABI's policy adviser on taxation, in the statement. “Allowing the use of estimated returns is a pragmatic response which should go some way to easing the transition for insurers.”
U.K. regulators have asked property/casualty insurers to stress test their capital reserves against catastrophes, reported Bloomberg.