Section 201: Insurance Premium Tax: Contracts That are Not Taxable
Summary
1.Insurers do not have to charge insurance premium tax (IPT) on contracts of insurance in relation to motor vehicles where, subject to other specified conditions being satisfied, the vehicle is used or intended for use by a handicapped person who is in receipt of a specified benefit. Section 201 adds further references to the list of specified benefits so that the IPT reliefs that currently apply to vehicles used by persons who are in receipt of the mobility component of a disability living allowance (DLA) will additionally apply to vehicles used by persons who receive the mobility component of a Personal Independence Payment (PIP) or receive an Armed Forces Independence Payment (AFIP).
Details of the Section
2.Section 201 amends paragraph 3 of Schedule 7A to the Finance Act 1994 by adding appropriate references to the new PIP and AFIP benefits.
Background
3.As part of the June 2010 Budget, the Government announced its intention to reform DLA with effect from 2013-14. Proposals for replacing DLA with the new PIP formed part of the consultation on welfare reform, and the new PIP was introduced in Part 4 of the Welfare Reform Act 2012. AFIP is an additional new benefit targeted at disabled armed forces service personnel. Both new benefits will have effect from 8th April 2013 and are being phased in over a period of time with the intention that they will eventually replace DLA.
4.As both PIP and AFIP will be phased in for new applicants, the relevant legislation needs to refer DLA, PIP and AFIP until such time as DLA has been completely phased out.
