UK Insurance Premium Tax Calculator: IPT Added to a Premium
Work out the UK Insurance Premium Tax (IPT) added to an insurance premium and the total you pay — the tax applied to most general insurance, from car and home to pet cover.
Adjust the inputs and select Calculate for a full breakdown.
Compare Common Scenarios
How the numbers shift across typical situations for this calculator:
| Scenario | Insurance Premium Tax | Total premium |
|---|---|---|
| 12% of £600 (£72) | $72.00 | $672.00 |
| 12% of £350 (car insurance) | $42.00 | $392.00 |
| 20% of £80 (travel insurance, higher rate) | $16.00 | $96.00 |
| 12% of £1,200 (home insurance) | $144.00 | $1,344.00 |
How This Calculator Works
Enter the net premium (before tax) and the IPT rate. The calculator returns the IPT and the total premium including it. IPT is added by the insurer to most general insurance premiums — it's not a separate bill, but it's included in the price you pay.
The Formula
Percentage Add-On
Rate is the tax or tip percentage applied to the amount
Worked Example
A £600 net premium with IPT at the standard 12% rate adds £72, for a £672 total. Insurance Premium Tax applies to most general insurance — car, home, pet, and many other policies — at the standard rate of 12%. A higher IPT rate (currently 20%) applies to certain insurance, notably travel insurance and some warranties sold with appliances or vehicles. IPT is included in the premium your insurer quotes, so you're already paying it; this calculator shows how much of the price is tax.
Key Insight
Insurance Premium Tax is a quietly significant UK tax that's baked into the price of most general insurance, so many people pay it without noticing it as a separate cost. Key points: the standard rate (12%) applies to the bulk of general insurance — motor, home/buildings and contents, pet, and similar — while a higher rate (20%) applies to specific categories, most notably travel insurance and insurance sold alongside certain goods (appliance, electronics, and some vehicle warranties), which is why travel cover carries a heavier tax. Some insurance is exempt from IPT, including most life insurance and certain long-term and commercial cover. IPT is not VAT (insurance is exempt from VAT, and IPT exists as a separate tax on insurance), and it's collected by insurers and paid to HMRC, so it appears within the premium rather than as a line you pay separately — though some insurers itemise it. For consumers, the practical implications: the quoted premium already includes IPT, so comparison shopping is on the all-in price; there's no way to avoid IPT on a taxable policy, but you can still reduce your premium (and the IPT on it, since it's a percentage) by shopping around, increasing voluntary excess, or improving risk factors. This calculator isolates the tax within a premium so you can see how much of what you pay is IPT versus the cover itself.
Frequently Asked Questions
How is Insurance Premium Tax calculated?
Multiply the net premium by the IPT rate and add it. At the standard 12% rate, a £600 premium has £72 of IPT, for a £672 total. The insurer includes IPT in the price you're quoted.
What's the rate of IPT?
The standard rate is 12%, applying to most general insurance (car, home, pet, etc.). A higher rate of 20% applies to certain insurance, notably travel insurance and some warranties sold with appliances or vehicles — which is why travel cover carries a heavier tax.
Which insurance is subject to IPT?
Most general insurance — motor, home (buildings and contents), pet, and similar — is taxed at the standard rate. Travel insurance and some sold-with-goods warranties are taxed at the higher rate. Most life insurance and certain long-term and commercial policies are exempt from IPT.
Is IPT the same as VAT?
No. Insurance is exempt from VAT, and IPT exists as a separate tax on insurance premiums. They're different taxes — you won't see VAT on insurance, but most general insurance carries IPT, included within the premium your insurer charges.
Can I avoid paying IPT?
Not on a taxable policy — it's built into the premium and collected by the insurer. But because IPT is a percentage of the premium, reducing your premium also reduces the IPT: shop around, consider a higher voluntary excess, and improve risk factors (security, no-claims history) to lower the base premium and the tax on it.
Related Calculators
Methodology & Review
The tax is the IPT rate applied to the net premium; the total is the premium plus IPT. It models the standard rate of IPT and does not handle the higher rate that applies to certain insurance (e.g. travel insurance and some warranties).
Written by Ugo Candido · Last updated May 22, 2026.