Insurance Premium Tax (IPT) is not the most apparent tax that springs to mind. In fact, I could be so bold enough to say that the majority of people wouldn’t have ever heard of it. Almost contradictory to this is that if you’ve ever taken out a motor, travel or house insurance policy, this tax would’ve undoubtedly been mentioned (lost to the void of unopened / unread T&C’s).
To the aspiring indirect tax professional, you may have had some exposure to this before, but have you ever considered that it’s a viable opportunity to develop a sought-after indirect specialism? Being a recruiter who focuses solely on identifying talent across the EMEA indirect tax market, it’s common that many of our candidates come from an industry-specific background, be it real estate, TMT, or financial services, or automotive, and so on. But with the insurance sector growing - as with the emphasis on having industry-specific tax professionals in either professional services or in-house teams - we’re certainly starting to see a clear skills gap in the market for dedicated IPT professionals with the demand versus supply of IPT professionals being heavily imbalanced.
With you being an indirect tax specialist, IPT is merely another route to progress your career, become an industry expert, and still achieve senior positions such as Director, Head of Tax, and Partner. The take-home, here, is that just because you’ve acquired a niche focus, it doesn’t prohibit your career prospects. In many ways, it can be optimal for career development.
What is IPT?
IPT is a tax on insurers which covers general insurance premiums such as motor, travel, mechanical and electrical. Of course, VAT is generally the first point of call when you think of an indirect tax, however, IPT has its prominence in the insurance sector.
There are 2 different rates in the UK, being;
Rate 1 (standard rate) - 12%
Rate 2 (higher rate) - 20%
Although I’ve previously mentioned how niche IPT is, the insurance sector (UK) is a booming industry that shapes a significant part of London’s financial market. Let’s take the graph below, for instance(). This is combined with the Financial Services sector to which Insurance is commonly associated with.
It becomes immediately apparent that the bulk of the job market within the insurance industry is situated in the private sector. This shouldn’t come as a surprise as, as of 2016 there were 934 general insurers in the UK (340 have their headquarters UK based).
What is the role of an IPT specialist?
A career in IPT can be just as diversified as VAT as there are plenty of other options outside of insurance companies.
Being an indirect tax professional, the start of your career may have an emphasis on compliance-based duties, such as preparing and filing IPT obligations as well as other analytical reporting responsibilities. This can often quickly progress to a more varied job description, perhaps involving project leading or running seminars.
The sort of progression follows a linear fashion to what could be expected of a VAT professional. Of course, they’ll be various job title differences but as you take steps up the ladder, you can find yourself in positions with more managerial and supervisory responsibilities.
What is the earning potential of working in IPT?
As a recruiter who exclusively covers the entirety of the EMEA market, this is an easy question to answer. If you’re based in London, you could expect to make anywhere from £32k-£50k from 2 years + experience. If you were to find yourself a top senior role, you can comfortably expect a six-figure salary.
There are, of course, differences based on how extensive / specialised your experience is. One example may be working within an insurance company, where the role could become slightly more generalised (IPT, VAT, Corporate Tax etc.).
While London is a key market for Europe’s IPT, these roles can also be found across other European countries. As of 2016, 563 of the 934 UK insurers were based around Europe, with countries such as Germany and Switzerland being the most influential insurance areas. However, there are motions in progress that have highlighted that Malta is becoming a strategic location of global insurers due to the efficiency and ease of setting up captive insurers (Subsidiary insurance companies set up by parent companies to reduce risk).
The average salaries in the UK FS sector can be seen above with insurance included.
Why would you choose IPT as a career?
From a realistic standpoint, IPT generally isn’t the conventional direction a tax professional dreams of when starting their careers. However, the appeal of IPT cannot be ignored. While indirect tax, in general, is still a candidate short market, what better way to distinguish yourself within the indirect tax world as a specialist in a growing global market? Remember, the choices aren’t as limited as you may think!
If you’d like more information on Europe’s IPT market, please do feel free to get in touch.
About the author
Ed Moore is a Recruitment Consultant within Harvey John’s Indirect Tax & Tax Technology team and focuses on recruiting for companies across the Financial Services and Insurance sector.
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