This month’s back to basics article has a health and wellbeing theme, as we look at three tax-free benefits which employers can provide to support staff welfare.
Welfare counselling and health screening
The theme of this year’s Mental Health awareness week in May was ‘no mind left behind’. It is estimated that that 1 in 4 people will experience mental health issues every year, which means that almost every employer is likely to come across mental health concerns with their staff – or experience problems themselves.
One way that employers can help support staff experiencing issues might be to offer access to suitable counselling services. In general, the provision of counselling services for employees is a taxable benefit. However, HMRC will allow an exemption for employers to pay for ‘welfare counselling’ directly. (Reimbursing an employee’s own costs is not tax-free) This covers a range of specific issues including stress, problems at work, debt problems, alcohol and other drug dependency issues, harassment and bullying. The full, detailed list of allowable support is available in HMRC’s Manuals.
The potential areas for tax-exempt counselling are itemised as it is not HMRC’s intention that all forms of counselling should be covered by the exemption. For example, advice on tax, financial or legal matters is specifically excluded. But it is possible for any welfare counselling in connection with the approved list of issues to include medical treatments like CBT (Cognitive Behavioural Therapy) or interpersonal therapy. In general, counselling is only exempt if provided to an employee, and not if it is provided to any members of their family.
Employers can also provide one health screening or one medical check-up per employee, per year. Of these, the first is more likely to be a questionnaire type exercise to highlight potential health risks, while a medical check-up is likely to involve a physical examination.
Flu jabs or vouchers
It’s more hayfever season than flu season now, but it’s never too soon to plan ahead. Employers concerned about flu causing problems for their workforce can provide their employees either with a flu jab on site, or a voucher for the employee to receive a jab at a pharmacy, without a tax charge arising.
Be warned though that this favourable tax treatment is currently only available where the employer pays directly for the benefit. If an employer reimburses the employee for the cost of their flu jab instead, this creates a tax charge on the cash received. This is one of the more frustrating aspects of the tax code, as the outcome in both cases is the same – a vaccinated employee, who is less likely to fall sick. The Government has looked at this area recently, so it may be an imbalance that is resolved in future, depending on the priorities of any future Government.
As rules currently stand, there is no similar exemption for covid vaccines. As private covid vaccination routes open up, employers need to be aware that the tax rules currently treat covid and flu jabs differently. Private covid jabs are also likely to exceed the £50 cost limit to qualify as an exempt trivial benefit.
Eye tests
Where staff use a computer screen, employers can pay for an eye test and the cost of any glasses or contact lenses needed for Visual Display Unit (VDU) use without creating a benefit in kind.
Be warned though, that this is quite a narrow test. If the employer tries to pay for an employee’s glasses which are intended for more general use, this will create a tax charge. Only the element of cost which relates to a special prescription for VDU use can be paid tax-free.
Again, as for flu jabs, the employer either needs to meet the cost directly with the optician, or provide a voucher for an eye test. If the employer reimburses the cost of an eye test incurred by the employee, then the reimbursement will be taxable.
This article reflects the position at the date of publication shown above. 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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