Health minister hints at tax break to boost take-up of OH

The government has again hinted at introducing incentives to encourage employers to offer occupational health (OH) services to staff.

Speaking at the Association of British Insurers (ABI) health conference last week, health minister Lord Hunt said he could “understand the psychological importance of the state providing some kind of enhancement” to employers.

Research published at the conference concluded that staff would benefit from better OH services if the government acted to remove tax disincentives for companies that provide them.

The study by NERA Economic Consulting, commissioned by Norwich Union Healthcare, found there was a mismatch between those who paid the lion’s share of the costs of OH (employers alone) and those who benefit most from it (employers, staff and the government). OH is currently taxed as a ‘benefit in kind’ and attracts National Insurance (NI) liability.

Stephen Haddrill, ABI director-general, said: “The state penalises employers who provide OH care for their staff. By removing tax disincentives, OH in the workplace could flourish.”

Edward Bramley-Harker, associate director at NERA, said: “There is a role for tax incentives to try to encourage employers to invest in this area. If employers are left to their own devices, they are going to under-invest from society’s perspective.”

NERA’s report recommended tax relief on NI payments. “My preferred approach is to allow employers to offset the cost of intervention against National Insurance contributions,” said Bramley-Harker.

Separate research shows how far the government has to go in convincing employers to take a more proactive approach to OH. Just 15% of the 435 organisations surveyed thought it was the responsibility of employers to promote OH services.

What employers think the government should do

  • Help with cost, tax relief 67%
  • Information about OH 11%
  • Challenge sick pay culture 8%
  • Easier access to services 11%
  • Proof of cost-effectiveness 3%

Source: ABI

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