A consultation on the Government’s plans to offer employers a tax break for investing in workplace rehabilitation is due to close later this month.
The targeted tax relief on health-related interventions was announced by chancellor George Osborne in the March 2013 Budget.
The consultation on the proposal runs until 16 August and has, in the process, added some flesh to the bones of the Government’s plan.
The Treasury said that the aim of the changes was to introduce a new targeted tax exemption to apply where the Government’s new health and work assessment and advisory service recommends health-related interventions to help an employee return to work: “Where an employer funds such interventions, the expenditure, up to a cap of £500, will be exempt from income tax and national insurance contributions.”
It added that this cap will apply per employee over a business’s complete tax year.
The Treasury’s document said: “[The cap] will be valid for more than one health-related intervention recommended by the new service, subject to the overall annual limit.
“The exemption will be limited to treatment and therapies recommended by the new service. It will not apply to employer expenditure on specialist equipment, workplace adjustments, travel expenses, or recommended interventions that do not rank as medical treatment or therapy.
“There are existing tax exemptions, such as for employer-funded welfare counselling, that may apply to other steps taken to support employees in returning to work.”
To simplify the process as much as possible, the Treasury said that it intends “that where a health-related intervention is recommended by the new service and the employer meets the cost, relief will be due for any method of payment”.
This could include “where the employer pays a third party provider directly for treatment arranged by an employee, arranges and pays for treatment on behalf of an employee or reimburses an employee”.
Expenditure over the £500 cap would be classed as payment of earnings or a benefit-in-kind, depending on the type of expenditure, and as such would be subject to the appropriate taxes, it added.