The government cannot realistically expect employers to fund workplace health schemes or pay to get sick staff back to work as long as it continues to tax this spending as a benefit. . A report out this week finds the government once again under fire for failing to address these tax barriers. Yet a major report this year, commissioned by the government itself, from Dame Carol Black recommended early intervention to get people off sick and back to work and keep them there there. When the government reponds to that report in the autumn it must address the unfairness and contradictions in the way spending on work and health is taxed.
For example, if employees are exempt from tax when their employers provide an Employee Assistance Programme (EAP), then why should an employee be taxed when their employer pays for them to join a private gym? Both are ways to prevent ill health and build employees' resilience.
Another problem is that the current system penalises the very people the government wants to target - the vast majority of employeees who work for small and medium sized companies. Currently benefit tax is exempt on employees if their employer provides a a gym or sports facilities but staff in smaller firms are penalised if their employer pays for private gym membership.
And what about employers who want to pay for treatment to get staff back to work when off sick? Surely the government should provide tax exemptions for all spending on vocational rehabilitation, regardless of whether the illness or injuries are solely work-related or not. Currently if an employer pays for an employee's treatment to get them back to work for reasons which are not solely work-related, the employee has to pay tax on it. Yet there are often long waiting lists on the NHS meaning treatment is provided too late to stop the employee swelling the ranks of those on incapacity benefits. One solution is to change tax rules on private medical insurance so that the benefit is tax exempt when it applies to return to work treatment.
The government must make the tax system fair and ensure it supports employers in improving the health of employees and cutting the numbers of those on incapacity benefits. Saying that tax incentives are 'at a very early stage of development' is not good enough after years of lobbying and the backing of the CIPD among other organisations. The time to act would be this autumn when the government responds to Dame Carol Black's review.
