Income tax regulations introduced by HM Revenue & Customs (HMRC) could result in employers discontinuing health screenings and medical check-ups for their staff, it has been warned.
The caution follows an amendment made to the Income Tax (Exemption of Minor Benefits) Regulations 2002, which states that health screenings will only be free from tax if they are made available to all employees. Similarly, medical check-ups must be made available to either all employees or those employees who are identified in a health screening as requiring a medical check-up.
Adrian Norris, managing director of Buck Consultants (Healthcare), said the amendment was a “bombshell” because extending health screenings to all staff would result in enormous costs for employers.
“Questions need to be asked about what the objective was behind the regulations,” he said. “Health screening is commonly described as executive screening because the majority of organisations only buy it for their senior staff as an executive benefit. HMRC seems to be operating in its own world and making its own judgments about how benefits and tax fit together.”
Chris Evans, head of health & risk development at PIFC Consulting, said the regulations appeared to be a “crude attempt” to encourage employers to extend health screenings to all their employees.
“The regulations may act as a disincentive for employees who see the tax burden outweighing the benefits of a health screen,” he said. “It seems to be strangely out of kilter with the government’s stated objective of raising health and wellbeing in the workplace.”
However, Dudley Lusted, head of corporate healthcare development at
“A health screening could involve assessing employees to discover who has an increased health risk,” he explained. “This could be done cheaply and offered to everyone.”
Lusted added that not all employees have to undergo a screening, but if it is not at least offered to all staff a tax charge will arise.
“Unless the employer is willing to pay this tax, there will be a reduction in the number of employees taking up the benefit,” he said.