How to Record Insurance Premium Tax (IPT) in Scribe Accounts

What is Insurance Premium Tax (IPT)?

Insurance Premium Tax (IPT) is a tax levied on general insurance premiums in the UK. It is not the same as VAT and is specifically applied to insurance products such as home, car, and travel insurance. Unlike VAT, IPT cannot be reclaimed, meaning that it forms part of the overall cost of the insurance. Insurance itself is generally exempt from VAT, so no VAT should be applied or reclaimed on these transactions.

How to Record IPT in Scribe Accounts

When entering insurance-related transactions that include IPT in Scribe Accounts, follow these steps:

1. Navigate to the Payments Section

• Go to Transactions → Payments.

2. Add a New Payment Record

• Click on the Add button at the top of the Payments list view.

3. Enter Payment Details

• Supplier: Select the insurance provider from the list of suppliers. If the provider is not listed, you can add a new supplier by clicking on the Add New Supplier option.
• Payment Date: Enter the date of the payment.
• Reference: Input the reference number or policy number provided by the insurance company.
• Net Total: Enter the total amount paid for the insurance, which should include the Insurance Premium Tax (IPT).

4. Set VAT Type to Exempt

• Since insurance is exempt from VAT, ensure that the VAT Type for this payment is set to Exempt.
  • To do this, select the appropriate VAT Type from the drop-down list.
• Important: Do not attempt to reclaim VAT on this payment, as it is not applicable.

5. Add Description and Notes

• In the description field, provide a brief description of the insurance payment, including details like the policy name or period covered.
• You can also add any relevant notes for future reference.

6. Save the Payment Record

• Once all details are entered, click Save to record the payment.