The UK government is scrapping a 6% tax on insurance premiums for satellite operators based in the country to bring the industry in line with other space-fairing nations.
The insurance premium tax (IPT) currently applies to polices relating to a…
The UK government is scrapping a 6% tax on insurance premiums for satellite operators based in the country to bring the industry in line with other space-fairing nations.
The insurance premium tax (IPT) currently applies to polices relating to a satellite’s construction, launch and operations in orbit.
The tax affects many sectors in the UK, however, as part of a drive to attract more investment in space, the government vowed in its recent 2014 Budget announcement to exempt space satellite insurance from IPT under legislation likely to come into effect by the end of this year.
British satellite operators Inmarsat and Avanti already avoid the brunt of IPT by having offshore companies to handle the launch side of their contracts. The move is therefore only applicable to their in-orbit placements, which tend to have substantially smaller premiums because risk is greatly reduced once a bird is in place.
“We’re talking about tens of thousands and not tens of millions of dollars here,” said one insurance source.
According to law firm CMS, which has been lobbying for the exemption for the last three years, IPT adds around 0.5% to the insurance cost of a satellite, putting operators at an international disadvantage.
“This is excellent news for UK-based satellite operators who will be free from an anti-competitive tax,” said CMS satellite lawyer Joanne Wheeler.
“The government has listened to the industry and is clearly committed to growing the UK space sector.”
As well as a direct saving from having no tax on the premiums they pay, the move also saves UK operators the hassle and cost of setting up offshore companies, or making similar arrangements, to avoid or reduce their satellite insurance premium costs.
