Plans by HM Revenue & Customs to tax employee assistance programmes (EAPs) will not help the government in its bid to reduce stress caused by financial concerns and should be scrapped, according to the Chartered Institute of Personnel and Development (CIPD).
Services offered under EAPs have traditionally been defined as ‘welfare counselling’, and are tax-exempt benefits. But the Revenue is now taking a sterner view on the grounds that they can include financial and legal assistance.
When the CIPD carried out a poll of 255 employers to find out what effect the proposal to tax EAPs would have, 86% of those operating a scheme said they would consider withdrawing it if it became a taxable benefit
Charles Cotton, CIPD pay and benefits adviser, said: “Taxing EAPs just doesn’t make sense. It could destroy the government’s attempts to improve the financial understanding of the population and reduce stress caused by debt.”
Eric Marshall, chairman of the Employee Assistance Professionals Association, said: “Nothing within the EAP service can be seen as delivering a monetary benefit, so how can [the government] justify a tax?
“The legal and financial services provided within an EAP are offered within a mental health model to help people cope with their concerns and find a way forward.”