The erosion of a good idea…

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Last week HM Revenue and Customs produced a consultation document on the long-awaited new tax-break for medical interventions.  Those with a good memory will recall that this new tax incentive is designed to sit alongside the Health and Work Service (HWS), which starts it’s early pilots in the UK from October onwards, and will be nationally available to all by Spring 2015.

The consultation puts forward the final proposals for what absence will – and will not – qualify for this tax break.  For full details please see the consultation document:  HMRC Consultation: Tax Break for Medical Interventions

It’s useful reading for any employer keen to reduce sickness absence, and I welcome the new tax break.


What is proposed seems somewhat hard-work for what is only a nominal tax break for employers and employees (we are only talking about a maximum £500 attracting tax-relief for both parties).  The conditions set out here seem more complex than is necessary, and may actually act as a disincentive to either party seeking to access this.

Sadly, this is the latest blow to some proposals that only a year ago seemed robust, and likely to make a real impact to the UK’s sickness absence costs.

The decision to move the Health and Work Service (HWS) from a mandated service to one for voluntary referrals was the first blow, and this in turn leads to a consent issue (previously covered on this blog) which could otherwise have been avoided.  These changes alone were enough for the DWP to dramatically reduce their own estimates of how many people the service would assist in the early years.

And should the final proposals for the tax-break remain unchanged, then this incentive may also be under-utilised.

That is not to say that both these moves are not welcome – they are – but the legislators seem to be overlooking the original aims of the exercise which was to head off long-term absenteeism by early and effective interventions.  The more obstacles thrown in the path of these new services, the less effective they will actually be.

I will of course report back once the final details are known.  In the meantime, a useful summary of the proposals can be found on the HR Bullets website here:  HRB: Qualifying for tax exemption

Best regards



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About the author

Steve Herbert is an award-winning thought leader on Pensions and Employee Benefit issues. His principal aim is better communicating the value and usage of employee benefits to employers. This he has achieved through many (highly successful) seminar series over the last decade, and his regular and widely read blog posts on the subject.
He also acts as a judge in HR and Employee Benefits industry awards, article writer, and product innovator. Steve is a regular contributor to DWP forums and compulsive responder to formal Government Consultations on pension and employee benefit issues. He is occasionally accused of making employee benefits interesting.