Taxation, taxation, taxation...

Taxation is a hot issue most of the time, but particularly in the current economic climate.

We can expect that in due course the Chancellor, Tory or Labour, will be looking hard at options to pay for the current credit crunch bail-out. Health benefits are unlikely to be exempt and here are two possibilities:

Employee Assistance Programmes: There have been rumours recently that EAPs could become subject to benefit-in-kind. The excuse, if one were needed, is the belief that such helplines may be offering legal and financial help to people who are not under any particular stress but just want to get some free advice. HMRC have now stated that EAPs that provide anything other than “welfare counselling” are likely to lose tax exemption. It will not apply to the great majority of EAPs currently in operation, but EAPs are clearly no longer off limits as far as tax is concerned.

Health Trusts: What was widely seen in the early years as a ‘loophole’ to avoid Insurance Premium Tax has been tolerated by Governments over the past 15 years, but never formerly acknowledged as a legitimate means of avoiding tax. It would seem difficult to classify something that appears clearly not to be insurance as just that, but the scale of lost revenue now amounts to 13% of the market…very tempting!

Of course, in the meantime we have been given a 2.5% reduction in VAT. You may think that this will have no impact on health benefits as medical services have always been VAT-exempt. In fact there will be a small dividend as medical products (drugs, prostheses etc.) are not exempt if supplied to a commercial hospital. We must trust that insurers negotiate suitable reductions in what they pay to the hospitals concerned.

Executive Health Screens remain tax-exempt

One area that was seen as fair game for taxation was Executive Health Screens.

We had a scare last year when the Government announced that these would no longer be exempt from P11d assessment if paid for by the employer unless all employees were entitled to the benefit. Under pressure, they changed their mind and said that they would give the matter further consideration. Now it has been confirmed by HMRC that legislation will be introduced early this year to make it clear that health assessments will not be subject to benefit-in-kind tax, whatever the proportion of the workforce receiving the benefit.

THE INFORMATION CONTAINED IN THIS DOCUMENT IS OF A GENERAL NATURE ONLY AND SHOULD NOT BE RELIED UPON AS ADVICE IN ANY SPECIFIC SITUATION

For further information, please telephone your usual contact at Buck Consultants (Healthcare):

Tel: +44 (0)118 955 7700
Fax: +44 (0)118 955 7701
Email: healthcare@buckconsultants.com
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Pinnacle, 20 Tudor Road, Reading. Berkshire RG1 1NH

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