As one of Britain's "Eight Great" technologies, the space industry has the "potential to propel UK growth", as David Willetts, previous UK Minister for Universities and Science said.
The UK Government is committed to the exciting opportunities open to the space sector and the goal of raising the UK share of the projected £400 billion global space-enabled market to 10% by 2030. As part of this objective, the Government seeks to make the UK the best place to grow existing and new space businesses and attract inward investment by providing a regulatory environment that promotes enterprise and investment in the UK.
Such a regulatory framework must also ensure that UK companies remain internationally competitive.
Insurance premium tax (IPT) - exemption for contracts relating to spacecraft
Prior to today, UK-based satellite operators needed to pay an onerous and anti-competitive IPT of 6% on general insurance premiums on satellite risks: putting UK companies at a competitive disadvantage compared with those based in other space-faring countries.
IPT is a tax on premiums received under taxable insurance contracts. All types of insurance risks located within the UK are taxable unless they are made tax-exempt. The 6% IPT added approximately 0.5% to the insurance cost of a satellite.
This exemption applies to cover for risks arising after launch, and does not apply to risks relating to the construction of the spacecraft. However, cover relating to loss of or damage to spacecraft being transported will be exempt under the exemption for contracts relating to goods in foreign or international transit.
Positive news for UK-based satellite operators
Joanne Wheeler of Bird & Bird worked as one of expert advisers to the Treasury to introduce the Insurance Premium Tax (Non-taxable Insurance Contracts) Order 2014 which came into force on 1 December 2014 and will amend the Finance Act 1994.
This Order is excellent news for UK-based satellite operators. The UK Government has listened to the concerns of the space sector and is taking positive action.
This legislative change is also further evidence that the Government is seeking to ensure that the UK is open for space business and is committed to attracting more investment into and in growing the UK space sector.
As Mark Garnier, MP Wyre Forest, says, "Space is one of the fastest growing sectors in our economy with ambitions to create 100,000 new jobs by 2030. This is a vital step in helping the UK become the best place in the world to do space business."