UK: HMRC Corrects IPT Treatment of UK-Based Embassy Buildings and Contents Insurance

HMRC published an update to Notice IPT1: Insurance Premium Tax on 31 July 2026, amending paragraph 5.2.3 to reflect the withdrawal of the concessionary treatment previously afforded to embassy buildings and contents insurance.

Previously, such risks could be treated as located outside the UK, consequently the associated premiums were considered out of the scope of the UK IPT regulations. HMRC has acknowledged now that this treatment was based on a misunderstanding of the legal status of embassies under UK law. While the change takes effect from 1 August 2026, existing contracts will remain unaffected until their renewal or replacement after that date, and HMRC will not revisit the IPT treatment of contracts entered into before that date.

Insurers and brokers writing buildings and contents cover for UK-based embassies should ensure that IPT is correctly applied on new and renewed contracts from 1 August 2026 onwards.

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Author

Edit Buliczka

Edit is a senior regulatory counsel. She joined Sovos in January 2016 and has extensive IPT knowledge and experience. Her role ensures the IPT teams and systems at Sovos are always updated with legislative changes. She is a Hungarian registered tax expert and chartered accountant and has worked for companies in Hungary including Deloitte and KPMG and as an indirect tax manager she worked for AIG in Budapest. She graduated with an economist degree from Budapest Business School, faculty of finance and accountancy and also she has a postgraduate diploma from ELTE Legal University in Budapest.

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