Make health benefits tax-exempt to increase uptake, retailer says

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Occupational health benefits should be fully exempt from tax to encourage more employers to offer them, a major UK retailer has recommended.

Currently, any employer-provided health benefits are considered a taxable benefit to the employee, and are subject to income tax. However, if an employer wishes to settle the taxes on their employees’ behalf, this can result in an effective tax rate of more than 40%, according to the John Lewis Partnership (JLP).

Although reimbursements are available in some situations, including up to £500 if a worker is absent for more than 38 days as a result of injury or ill-health, JLP said health benefits’ current status as a taxable benefit deters some employers from offering them.

In its Working Well report, it called on the government to make all occupational health services a non-taxable benefit to encourage more employers to invest in early intervention. Three-quarters (77%) of 1,017 workers surveyed by YouGov for the report supported the idea of tax breaks to help employers provide health and wellbeing services.

One in three workers said their employer did not offer any health or wellbeing benefits, but 64% said the availability of such services would have a positive sway on whether they should apply for a job at an organisation.

The report claims that investing in early clinical interventions for musculoskeletal and mental health conditions could save UK employers £38.1 billion by 2025, through reduced absenteeism costs and productivity gains.

Tracey Killen, director of personnel for the John Lewis Partnership, said: “Having a supportive employer who promotes employee health and wellbeing can make a real difference to someone grappling with a physical or mental health condition and their recovery. For business, a healthy, engaged workforce can boost performance and productivity.

“Today’s report highlights that if employers, health experts and the government all work together, we can achieve great things for the UK economy, businesses and workers.”

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