If you are an employer, it is beneficial for both you and your employees if your workforce is healthy. Consequently, you may want to offer benefits to help employees spot any issues early and get back to full health.
While the provision of private medical insurance (other than for employees working overseas) is a taxable benefit, the tax system contains a number of health-related exemptions.
Employees can be provided with one health-screening and one medical check-up each tax year without triggering a tax charge under the benefit-in-kind legislation. For these purposes, a health screening assessment is an assessment to identify an employer who may be at a particular risk of ill-health, whereas a medical check-up is a physical examination of the employee by a health professional for the sole purpose of determining the employee’s state of health.
The provision of additional health screenings and/or medical check-ups in the same tax year are taxable and must be notified to HMRC on the employee’s P11D.
While there is no general tax exemption for employer-funded medical treatment, there is a dedicated exemption for medical treatment that meets the definition of ‘recommended medical treatment’ which is provided or paid for by the employer. This is treatment recommended by a health professional as part of occupational health services provided to the employee to help the employee retain employment or is provided to assist the employee in returning to work after a period of absence due to injury or ill health (such as physiotherapy to help the employee return to work after a back injury).
The exemption is capped at £500 per tax year. Where the cost of the treatment is more than this, the employee is taxed on the excess over £500.
A tax liability arises in respect of the provision of medical treatment, other than recommended medical treatment, provided to UK-based employees. However, there is no tax liability where an employer provides medical treatment outside the UK and the need for the treatment arose while the employee was overseas for the purpose of performing the duties of the employment. The exemption extends to the provision of insurance against the cost of providing such treatment.
Where an employer is required by regulations made under the Health and Safety at Work Act 1974 to provide an employee with an eye test, no tax liability arises in respect of that test. If the test shows glasses and contact lenses are needed, the provision of these are also tax-free. However, the exemption is conditional on the access to tests and the provision of corrective appliances to those who need them is available to all employees to whom such tests must be provided.
Partner note: ITEPA 2003, ss. 320A, 320B, 320C and 325.