In SchemeServe, tax (most commonly IPT or VAT) is configured within your scheme and applied during rating. While a default tax field exists, best practice is to control tax logic directly within your rating files.

Where to Find the Tax Field

The tax field appears at the bottom of the Matrix tab

• It is defaulted to IPT

Relabelling the Tax Field

If you need to change the label (e.g. to VAT):

• Go to the Question Set Editor
• Navigate to Actions (top right)
• Update the tax label accordingly

Best Practice: Set Tax in Rating Files

Tax should always be configured in the rating files, not in scheme settings.

Why?

• Supports versioning
• Easier to maintain and update
• Provides greater flexibility and control
• Future-proofs your implementation

Setting Tax as a Rate

To apply tax as a percentage:

Behaviour

• Tax is applied across the entire policy
• Split proportionally across all insurers and risk groups

Setting Tax as a Fee

Alternatively, you can apply tax as a fixed monetary value:

• VAT is calculated as a fixed amount
• IPT needs to be derived from a value other than net premium
• Certain risk groups or insurers are tax exempt
• You need full control over how tax is calculated

Key Behaviour Differences

Tax as a Rate

• Applied across all insurers on the policy
• Automatically distributed proportionally
• Best for standard IPT scenarios

Tax as a Fee

• Applied only to the main insurer
• Other insurers will show £0 in Digit (accounts payable)

Suitable when:

• There is a single insurer, or
• You are manually controlling tax logic

Important Considerations

Multiple Insurers

• If a policy includes more than one insurer:
• Using Tax as a Fee
• The tax will only apply to the main insurer
• Other insurers will show £0, even if not exempt

This can lead to incorrect financial reporting

Therefore, tax as a fee is not recommended in multi-insurer scenarios

Using Tax as a Rate

Tax is applied across the entire policy

This may be incorrect if:

One insurer is tax exempt

Mixed Tax Scenarios (e.g. IPT Exempt Insurer)

If:

• One insurer is taxable
• One insurer is IPT exempt

Then:

• Using SetRate will incorrectly apply tax across both
• Using SetFee will incorrectly allocate tax to only the main insurer

In these cases, tax must be carefully calculated in rating and applied appropriately

Digit Considerations

Digit reporting is impacted by how tax is applied

Incorrect configuration can lead to:

• Misallocated tax values
• Inaccurate accounts payable data

Ensure your tax setup aligns with how Digit expects data to be structured