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Avoid the Increase in Insurance Premium Tax


Millions of people, including motorcar dealers, face seeing their insurance costs increase.

What is Insurance Premium Tax (IPT)?

IPT was first introduced to the UK in 1994. Many people are unaware of what IPT is or that they are even paying it. IPT is a form of tax on general insurance premiums added to any insurance policy, and is paid directly from the insurer to the treasury.

IPT has increased following the announcements in Chancellor George Osborne’s budget late last year.  The standard rate in the UK has risen from 6% to 9.5%, and is the 4th increase in standard rate since its introduction. A car warranty, also known as Mechanical Breakdown Insurance (MBI) is subject to IPT, meaning you will be required to pay IPT with any car warranty, unless you take out a used car warranty with Warrantywise.

Warrantywise are a fully independent company; therefore, you will not be paying IPT.  As a service provider Warrantywise operates as a VAT registered entity. This is a very important attribute in keeping our operating costs to a minimum, enabling us to reclaim the VAT on our overheads and on all service, maintenance and repair bills undertaken under contract to you within your plan. Traditional warranty companies usually operate on an insured basis and are either owned or contracted to an insurance company. This has a big downside, as they have to pay at least 15% of your money to their parent insurer as commission and 9.5% IPT, which cannot be reclaimed. Also, they are not permitted to reclaim any of the VAT on their overheads or Repair payments and have to pass this cost onto you. If you do the maths this all adds up to more than 40% of costs, which is passed onto you within your premium.

The benefit of taking out a used car warranty with us is that you will not be charged any of these extra costs. We would like dealers to take advantage of this, saving them money in the long run”.

Lawrence Whittaker – CEO Warrantywise

So why not make profit on our warranties with your own margin tool on our user-friendly online dealer portal at There is no hassle, no contracts and we provide you with the flexibility of pay as you go. The tax savings you will make by using an independent company like ours is just the beginning of the savings you can make.  Save yourself the IPT and take out a used car warranty with Warrantywise today!

Switch to Warrantywise for your extended car warranties and you’ll benefit from the UK’s highest level of warranty cover. We cover every make and model of vehicle and all our warranties include unlimited claims with no contribution up to the retail price of the vehicle per repair request. If you’re interested in offering the UK’s best-used car warranty to your customers then visit for more information.

Become a Wise Dealer today

Thanks for reading. Make sure to stay tuned to the Warrantywise blog, FacebookTwitter and Instagram for more great content throughout 2016!

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Warranty Wise and Warranty Wise Logo are trademarks of Warrantywise. The website "" and contents herein are for information purposes only. This does not form part of any contract of protection. Any and all Warranty Plan confirmation including Warranty Plan Documents and Application Forms will be issued upon purchase. It is important that you read our information supplied and then make your own choice of warranty cover together with any plan additions that you may need as a vehicle owner who demands to ensure that your vehicle warranty requirements are met now and in the foreseeable future. Terms & Conditions apply provided by Warranty Wise and also available to view here warranty plan terms Tel 0800 169 7880. Warrantywise VAT registration number 994 0914 85 all prices and monetary figures quoted include VAT at the current rate.