IPT Compliance in the UK: What Does the Metropolitan Fire Brigade Act Mean for Insurers in Greater London?

James Brown
September 15, 2021

IPT compliance is complex, especially when insurers are writing across multiple regions, jurisdictions or boroughs.

The consequences and implications of noncompliance can be costly, time-consuming and reputationally damaging.

Despite these risks, many insurers still depend on legacy systems to file IPT, leaving them open to human error and inefficiencies.

Sovos’ Guide to IPT Compliance, written by our experienced team of IPT and regulatory specialists, looks at the significance of digital transformation across different tax authorities, considers the ever-changing regulatory landscape on a macro scale, and provides practical advice on how to ease the stress of IPT filing.

In this short blog series, we look at some of the important regulations affecting IPT compliance in different countries. One of these is The Metropolitan Fire Brigade Act 1865 that affects Greater London in the UK.

The Metropolitan Fire Brigade Act 1865 and the London Fire Brigade Charge

A key legislation in effect today for Greater London is The Metropolitan Fire Brigade Act 1865.

In 1865, UK insurance companies stopped employing London’s firefighters and in the same year the Act was passed. This Act came into effect due to a fire in central London, known as the Tooley Street Fire, that caused huge damage.

Similar to other regulations passed in countries across Europe, the Act introduced a charge for insurers when covering fire related risks.

Since then, the London Fire Brigade (the Authority) applies this additional rate and issues an invoice for each company that falls under the Act’s designated locations.

Only applies in Greater London

This Act only applies to property situated in Greater London, excluding outer London boroughs.

The Authority issues an updated list of postcodes on an annual basis for locations that will be charged.

There isn’t presently any equivalent charge in place for insurers for risks outside of London, so this additional charge only applies to IPT for those located within the affected areas.

What types of property are affected?

The Act refers to ‘any property’, which can mean things like vehicles and marine vessels. These are included in the charge (if stored in or transported through Greater London or based on part of the River Thames).

What does this mean for insurers today in London?

Insurers need to calculate the aggregate value of the relevant property they are insuring and declare this.

The rate is £35 per £1million of the gross amount insured.

However, the Authority applies a de minimis rule if less than £25 is due to be settled, in total for the reporting period (based on a sum insured of approximately £714,000).

So for insurers writing an insignificant amount of relevant insurance in the applicable areas, the payment is unlikely to be requested.

Here are key points insurers in London need to know:

  • Insurers must declare this for the 2021 period by 1 June 2022
  • In the case of co-insurance, this should only be their share
  • Any sum insured relating to business interruption is excluded
  • It’s calculated based on the gross amount insured against fire in the previous calendar year

How Sovos can help

Regulations around IPT are constantly changing and being updated, so insurers need to keep on top of obligations, no matter how obscure charges are.

Sovos helps ease the burden of IPT compliance through a blend of regulatory knowledge and expertise, and best-in-class software built to handle compliance obligations now, and in the future.

Take Action

Download our IPT Compliance Guide for help with navigating the changing regulatory landscape and deadlines successfully, across the globe.

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James Brown

James Brown is a Consultant at Sovos. His academic background is in Law having studied the subject at undergraduate level, and he has since enjoyed various roles in the IPT Managed Services Department at Sovos.
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