Removals Insurance and IPT Rise

Insurance Premium Tax Changes

The rate of Insurance Premium Tax (IPT) increases on Saturday, 1st October 2016 from 9.5% to 10%.

This means all movers that sell insurance need to increase the rate as from tomorrow.

For those using removals administration software, settings will need to be adjusted and in most cases, this can be done without a visit from the software provider.

Removals Manager users can make the change within their app by going to;

Systems Maintenance > Company Maintenance > Add/amend company details, then adjust IPT from 9.5% to 10% and save settings.

Removals Manager (www.removalsmanager.com) can be contacted on 03300 249 284.

Move Administer users can find instructions on the Administer Software Blog and they can be contacted on 0845 430 8902.

For users of other software packages, please contact your provider.

 

Selling Insurance

As a removals business grows, it will inevitably reach a point when the owner asks themselves whether they should move from providing insurance (with 20% VAT), or sell insurance with IPT.

This question has been asked by AIM Members and the reply varies according to the circumstances and preferences of the mover. There is no “one size fits all” answer and we’re not experts on insurance, so we sought advice from someone who is.

Here is some very useful information from removals insurance broker, Gauntlet Relocation.

As you may be aware one of George Osbourne’s last legacies, was to increase the standard rate of Insurance Premium Tax (IPT); this will rise from 9.5% to 10.0% with effect from 1 October 2016.

This may raise the age old issue, “Should I Sell Customers’ Goods Insurance”?

This question is asked of me many times every week, despite removers having the opportunity to sell insurance without the need to be FCA authorised since April 2009. (This special exemption was granted to removers, self-storers and freight forwarders).

Although extended liability is still widely used, one of the main reasons for deregulation was the Regulators and Government recognising the alternative liability route actually resulted in less consumer protection, without any protection for customers if their mover went bankrupt.

It is often suggested ‘when a client purchases insurance, it encourages claims’. I have analysed my client base and there is no evidence of this. If you use your terms and conditions, acceptance forms and job sheets correctly; where possible detailing any pre-existing damage, claims are managed well using either insurance option.

You might also wish to consider: –

  • If you include insurance in your overall quotation, you apply 20% VAT to your quotation. If you sell insurance separately, this element of your quotation is subject to IPT (as of October 1st at 10%); saving your client money and making you more competitive.
  • In the advent of a claim, a mover using extended liability pays the excess, without the ability to pass the deductible onto their customer. If you sell insurance, your customer pays the excess.
  • Most major movers are selling insurance, smaller companies can offer similar cover, which helps with any confusion and helps provide like for like services.
  • When required, you can still include the insurance for free as a commercial decision.

Both options are perfectly legal, but in this competitive age, it might be worth considering the sale of insurance. Should you wish to discuss the issues or require further information do not hesitate to contact me.

Graham Puddephatt

Managing Partner

T:  01825 890 983

[email protected]

www.gauntletrelocation.co.uk

 

 

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The Association Of Independent Movers
Unit 4, Skills Centre,
Twickenham Trading Estate,
Rugby Road,
Twickenham,
TW1 1DG
Phone:0208 892 0369

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