Citation, commencement and effect

1. —(1) This Order may be cited as the Insurance Premium Tax (Discounted Insurance Premiums: Higher Rate) Order 2011 and shall come into force on 1st April 2011.

(2) This Order has effect in relation to a premium which falls to be regarded, for the purposes of Part 3 of the Finance Act 1994, as received under a taxable insurance contract by an insurer on or after 1st April 2011.

Amendment of Schedule 6A to the Finance Act 1994

2.Schedule 6A (premiums liable to tax at the higher rate) to the Finance Act 1994( 2 ) is amended in accordance with this Order.

Amendment of paragraphs 2 and 3

3. In paragraphs 2(1) and 3(1), for “A premium” substitute “Subject to paragraph 5, a premium”.

Insertion of paragraph 5

4. After paragraph 4 insert—

“ Insurance relating to motor cars, motor cycles, domestic appliances, etc provided at a discount

5. —(1) This paragraph applies where (apart from this paragraph) a premium would fall within paragraph 2 or 3 but the insurance is provided to the insured at less than its full cost.

(2) For the purposes of this paragraph the cases where the insurance is provided to the insured at less than its full cost are those cases where the amount charged in respect of the taxable insurance contract by any person falling within sub-paragraph (2) of paragraph 2 or 3 to any person who is or becomes the insured under the contract is less than the premium.

(3) Only so much of the premium as does not exceed the amount charged falls within paragraph 2 or 3. ” .