Laptop surrounded by home-medical supplies such as tablets and tissues
Tax incentives for occupational health

The number of people in the UK who are not working due to long-term illness is at a record high. Currently, 2.6m people are economically inactive due to long-term sickness, an increase of 23% over the last decade. 

At the Spring Budget, the Chancellor announced a package of measures attempting to tackle this issue, including a recently published consultation on tax incentives for occupational health.

What do we mean by ‘occupational health’?

For these purposes, ‘occupational health’ covers a range of services provided by employers, including those aimed at:

  • promoting and maintaining a healthy workplace environment and culture; and
  • supporting employees who are disabled or have health conditions to return and remain in work.

Currently, only 45% of workers in Great Britain have access to such services, dropping to 18% in small businesses.

The consultation explores the reasons for this, asking what services are currently provided by employers, how much is spent, and how tax incentives can affect decisions. It then goes on to consider whether further tax incentives could play a role in encouraging employers to provide occupational health services to their employees. 

What tax incentives are proposed?

The provision of occupational health services is generally already a tax deductible expense for employers. The consultation therefore focuses mainly on their treatment for Benefit in Kind (BiK) purposes.

Currently, specific BiK exemptions state that, provided certain conditions are met, employers can provide the following to employees without them incurring income tax or NICs:

The consultation asks whether these exemptions should be extended to cover a wider range of health related services provided to employees, including:

  • Health screenings and medical check-ups for employees, within a specific pre-defined limit.
  • Treatments that aim to reduce workplace absence or enable employees to perform better (including preventative treatments).
  • Flu vaccinations which are paid for by the employee and later reimbursed by the employer.

The consultation also outlines that the Government does not intend to provide a BiK exemption for the following, though does invite views on whether there is a case for considering them:

  • Private medical insurance.
  • Non-clinical treatments (e.g. gym memberships, wellness retreats).
  • Wages for occupational health staff employed by the business.
  • Consulting costs relating to occupational health strategy.
  • Costs relating to family members or other persons that are not employees.

Finally, views are also sought on whether alternative tax incentives (such as giving employers super-deductions for occupational health costs) might be more effective than expanding the current BiK rules.

Next steps

The consultation closes on 12 October 2023, and you can submit your comments using the dedicated online survey. Alternatively, we will be compiling a response and would be happy to receive any comments you may have at [email protected].

  

This article reflects the position at the date of publication (15 August 2023). If you are reading this at a later date you are advised to check that that position has not changed in the time since.

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