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When devising healthcare policy, the government needs to take a holistic approach. This includes considering the trade-off between the cost of tax reliefs now with the reduction in spending in the future on healthcare and health-related social security benefits.
ICAEW’s Tax Faculty expressed this view in its response ICAEW REP 103/23 to the HM Treasury/ HMRC’s consultation on tax incentives for occupational health (OH).
Does provision of OH services by employers get people back into work? By its nature such provision usually only affects individuals who are employees of larger employers. Individuals who do not work for employers that have OH and tax expertise within a human resources function are unlikely to have access to workplace OH facilities.
The tax rules for incentivising occupational health (OH) provision are too complicated for most employers. For example:
- understanding the eye test conditions have proven to be so complicated that HMRC has flip-flopped in guidance on whether reimbursing employees for the cost of eye tests is a taxable benefit-in-kind (BiK). The original guidance was in line with Hansard, which confirmed that the intention of the legislation is that such reimbursements are not a BIK. The guidance was amended to deny relief where there was reimbursement. This issue is under discussion in HMRC’s Employment & Payroll Group.
- it is unclear whether the cost of apps that enable employees to select OH services is a taxable BiK.
Private medical insurance (PMI) and dental insurance have the potential to take pressure off the NHS. PMI is a frequent component of remuneration packages overseas, but the UK tax treatment as a BIK makes UK businesses uncompetitive.
In the interests of simplification, the tax distinction between employees being provided with a tax-free benefit or being reimbursed by their employer should be removed. This would reflect the economic reality that the employer has borne the cost. This should be across a range of health-related expenses.
ICAEW’s Tax Faculty is recognised internationally as a leading authority and source of expertise on taxation. The faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.
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