I recently mentioned on this blog that the above consultation was open, and indeed is due to conclude this week. Yesterday I spent a little time reading through the detail of the document to try to gauge the likely outcomes of this process.

This consultation is some way shorter than similar consultations issued by other government departments, so finding a few points of interest was relatively easy on this occasion. The items that jumped out at me were as follows:

The “consultation description” makes the following point:

“The government felt that a general tax relief for medical expenditure would be too broad and intends to introduce a new targeted tax exemption to apply where the new service [the proposed Independent Assessment Service] recommends health-related interventions to help an employee return to work.”

Which pretty much shuts the door at this time on the tax exemption being extended to insurances that may help prevent long-term absence (such as corporate Healthcare policies or group Cashplans). I have however still made the consultation aware of delegate views that such plans are generally felt to be more beneficial to controlling sickness absence than treatments post the long-term absence actually occurring.

The document also provides a little more detail on exactly what is proposed for the exemption at this stage:

Where an employer funds such interventions, the expenditure, up to a cap of £500, will be exempt from income tax and National Insurance Contributions (NICs).

The £500 cap will apply per employee over a complete tax year. It 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.

Which does at least help a little with the detail of what is proposed.

Yet is also raises a couple of valid questions as follows:

1) If the Independent Assessment Service (IAS) does not start on time, will this tax-relief be delayed also (which, given that the exemption is proposed to be limited to recommendations from the new service seems likely)?

2) Does this mean that only treatments recommended by the IAS will benefit from the tax exemption? If so, then presumably any employer or service who wants to provide similar treatments for the absent employee, but has not reached that conclusion through the IAS, will be at a disadvantage. This is surely not the intention of the Sickness Absence Review, and is something that I hope the consultation looks at before making the final decisions.

It will be interesting to see what the outcome of this consultation actually is, and as ever we will keep you posted via our blog and seminar series as this story develops.

In the meantime, and if you want to respond to the consultation and have not yet had a chance to do so, the link to this can be found in my earlier post: https://www.jelfgroup.com/blog/2013/08/the-consultation-is-open/

Best regards

Steve