In the UK, a hidden tax is applied to pet health insurance and I’d bet that most cat and dog owners have never heard of it. It is insurance premium tax (IPT) and it is levied at 12% to the insurance provider which passes on the cost to the customer. The customer does not realise that they are paying tax at 12% for the privilege of insuring their pet’s health.
IPT started out at 2.4% in 1994 but has climbed ever since. Twelve percent is the standard rate. There is a higher rate at 20% which applies to domestic appliances, car and travel insurance for instance.
In the UK 84 percent of households contribute to IPT but 66 percent of the population either don’t know about the tax or have a passing knowledge.
It is another expense to add the ever-growing list in the UK making the cost of living more challenging.
The point for cat owners is that caregivers of purebred cats are more likely to take out a pet insurance policy because purebred cats often inherit genetic diseases some of which can be serious and costly to treat such as hip dysplasia in Maine Coons or HCM which also affects Maine Coons and other popular cat breeds such as the Bengal.
Owners of these breeds and others will be paying IPT when they take out a pet health insurance policy and they won’t know about it as the provider is clawing the tax back from their customers by increasing the price of the insurance premiums.
It is something to be aware of when purchasing a purebred cat rather than adopting a rescue cat from a shelter which for many is the preferred route.
What Google’s Gemini says about IPT
The UK’s Insurance Premium Tax (IPT) is a tax that adds to the cost of pet health insurance, along with other general insurance policies like car and home insurance. Here’s the breakdown:
- IPT Rate: There’s a standard rate of 12% applied to pet insurance premiums [2]. This means for every £100 you pay for pet insurance, £12 goes towards the IPT.
- Impact: This tax adds directly to the overall cost you pay for pet insurance. The increase in IPT from 6% to 12% in 2015 is considered a reason for rising pet insurance prices [5].
Some things to consider:
- Hidden Tax: IPT is often called a “hidden tax” because it’s not a separate charge you see on your bill. It’s included in the total premium amount [4].
- Not Unique to Pet Insurance: This tax applies to most general insurance policies, not just pets [2].
Overall, the IPT is one factor that contributes to the cost of pet health insurance in the UK. If the government changes the IPT rate in the future, it could again affect pet insurance premiums.
Cat caregivers should be aware of it which is the purpose of this page.
RELATED: UK pet insurance. More excluded treatments. Rising cost of cover.
My personal advice is to ignore pet health insurance and start a savings account before you purchase a purebred cat and keep it going by transferring cash from the current account to the designated ‘pet health insurance account’ monthly, say £50-£100. In due course you’ll have enough to pay vet bills without being ‘milked’ by insurance companies and the UK government.
