Health benefits

Good employers look after their staff, and that includes ensuring that they get any necessary treatment for injuries incurred while working. However, if an employer pays for, say physiotherapy, to help with an injury which was not work-related this will amount to taxable benefit for the employee.

The rules relating to health treatments for employees are a patchwork of exemptions and special conditions. What’s more they are not covered in the HMRC booklet: 480(2019) Expenses and benefits guide, so it is not surprising that employers get things wrong.

The basic rule is that any health-related treatment for the employee, which is paid for by the employer, is taxable unless it is:

• given while the employee is working overseas and the treatment is required to be given overseas;
• part of a package to allow an employee to return to work, but this is capped at £500 per employee per year;
• related to injuries or diseases which result from the employee’s work.

Medical treatment includes treating any mental illness, so would cover counselling, but the difficulty may be how to justify that the treatment is needed solely because of a work-related trauma or stress.

HMRC is currently writing to large employers asking them how they assess whether physiotherapy treatment paid for on behalf of employees, falls into the tax-free category of treatment. If the employer replies with employee-specific detail it may be in danger of breach patient confidentiality and GDPR requirements, so such requests should be handled with care.

Written by the Tax Advice Network