Workplace rehabilitation tax breaks planned

Employers should be aware of Government proposals to introduce tax breaks for businesses which invest in measures to help employees return to work after suffering an injury or serious illness.

The workplace rehabilitation tax exemption was first announced by Chancellor George Osborne in his March Budget. However, more details have been made available as part of a Government consultation into the proposals, which is due to close this month (August).

According to the Treasury, expenditure by employers on medical treatment and therapies recommended by the Government’s new health and work assessment and advisory service will be exempt from income tax and national insurance contributions, up to a cap of £500.  Expenditure over this threshold would be classed as payment of earnings or a benefit-in-kind and, as such, would be subject to the relevant taxes. 

The exemption will not apply to expenditure on specialist equipment, workplace adjustments, travel expenses or recommended interventions which are not classed as medical treatment or therapy. There are related exemptions in place already, such as for employer-funded welfare counselling, which may apply to costs of other steps taken to support employees returning to work.

The consultation into these plans is due to close this month, so the proposed details may change by the time any measures are implemented.

However, these proposed tax breaks will come as good news to many employers who are eager to help key members of staff return to work as quickly as possible, while obviously also benefiting the employee in question. 

We await the outcome of the consultation but in the meantime should you require any further information, please contact Paul Wilkinson at the office.