Insurance Premium Tax (IPT) is a tax that’s added to the cost of a variety of insurance products, such as GAP insurance.
There are two rates of IPT:
A standard rate of 12%, which applies to most standard insurance policies.
A higher rate of 20%, which may apply to insurance policies taken out when buying a new car.
If you purchase GAP Insurance, the IPT fee is automatically applied to the cost of your policy at a higher rate of 20%.