A survey of employers has suggested that the government should consider a new tax break aimed at supporting workforce wellbeing.
Occupational Health Assessment has suggested there is much confusion about the tax treatment of many employee benefits, particularly an employee’s benefit-in-kind liability when an individual makes use of a company-paid offering.
Its research indicates that 84% of HR leaders would like the government to consider a new tax incentive around worker wellbeing, while 74% would favour a universal tax break that supports a wide range of employee wellbeing issues, including physical health, mental wellbeing and financial security.
Health and wellbeing
The evolving role of employee assistance programmes
With the Budget expected in less than three months, the wellbeing tax break would support NHS reforms, reduce absenteeism and help boost economic growth, the company claimed.
Steve Herbert, brand ambassador at Occupational Health Assessment, observed: “Much of the commentary in advance of the chancellor’s autumn Budget statement is centred on tax increases given the challenges of the nation’s finances.
“While employers recognise these concerns, many believe it is in the interest of all parties – government, employers and employees – if wellbeing tax breaks were simplified to ensure that more workers can be prevented from becoming ill and therefore stay fit, healthy and productive.”
OHA said that as a result of the confusion around tax on benefits, many potentially important offerings are either unavailable or remain unpromoted in many employer-sponsored wellbeing offerings. It gave examples including: the difference in tax treatment between employee and family members in employee assistance plans (EAPs); employer-arranged financial advice; and the tax treatment of low-cost health cash plans.
It also highlighted confusion about the taxation of reasonable adjustments recommended by OH professionals and the government’s newly launched WorkWell scheme.
Herbert added: “Company-funded employee benefits, wellbeing provision and OH support already do much of the heavy lifting in preventing minor wellbeing issues becoming major health problems for both the NHS and by extension the entire nation. It surely makes sense to clarify and reinforce support in this area to continue and extend this good work to many more employees.”
Magnus Kauders, managing director of Occupational Health Assessment, commented: “Our survey suggests that HR experts favour a universal wellbeing tax break rather than siloed tax incentives for specific components of workforce wellbeing.
“There is therefore a case for the government to review the tax treatment and tax incentives that currently exist for many low-cost wellbeing and employee benefits and perhaps replace this confusing landscape with one overreaching offering that is more easily understood, avoids any additional employee tax liabilities on these inexpensive benefits, and is easy to report under the new payrolling of benefits in kind system from 2027.”
The survey revealed that three in every four employers (74%) favoured a universal wellbeing tax incentive. The next most popular option was a tax break for financial wellbeing (12%), followed by mental health (9%) and just (4%) for physical wellbeing support.
Herbert concluded: “The government’s focus in NHS reform is moving the service from one of treating sickness to actively preventing illness. Encouraging employers to do more to support the wellbeing of their workforce will bring that ambition closer to reality.”
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