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Consultation on a new tax exemption for health related interventions

The government is consulting on a recommendation that expenditure by employers on medical treatment and vocational rehabilitation targeted at keeping sick employees in work, or speeding their return to work, should attract tax relief.  The government intends to introduce a new targeted tax exemption to apply where the new health and work assessment and advisory service recommends health-related interventions.  Such expenditure, up to a cap of £500, will be exempt from income tax and National Insurance Contributions.

The £500 cap will apply per employee over a complete tax year.  It will be valid for any number of recommended interventions, 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 specialist equipment, workplace adjustments, travel expenses, or costs 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.

Any expenditure over the £500 cap will, as now, be classed as payment of earnings or a benefit-in-kind, depending on the nature of the expenditure.

The government wants to make the exemption simple to administer.

Accordingly, the consultation seeks views on the implementation of the new exemption.  In particular, responses to certain specific questions would be welcomed.

Full details can be found here.



Date: 17th July, 2013
Author: Cathy Corns


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