Blog Search

Archives

Using tax to keep employees healthy?

The adverse effects of being inactive can of course have a major impact on health and wellbeing. According to a recent government report, workers can spend up to three-quarters of their day sitting down, which contributes to a range of preventable health conditions, including the two leading causes of workplace absence: back injuries and stress, depression or anxiety. In 2016/17, 1.3 million workers suffered from work-related ill-health, which equated to 25.7 million working days lost. This has been estimated to cost £522 per employee, and up to £32 billion per year for UK business. With this in mind, HMRC have recently been reminding employers that there are certain tax breaks on offer for those who promote health and fitness for their workers.

Businesses often offer employees workplace gym or leisure facilities, either run internally or by a third-party provider. Use of such facilities could be offered to employees for free or on a ‘paid-for’ basis. Providing certain conditions are met, in-house gym facilities may be offered to employees at a convenient location to fit in around work and there will be no tax or NIC liability arising on the provision of this benefit.

Broadly, to qualify as a tax-free benefit, the following conditions will need to be satisfied:

– available for use by all employees;
– not available to the general public;
– used mainly by employees, former employees or members of employees’ families and households (employees of any companies grouped together with to provide the facilities also count);
– not located in a private home, holiday or other overnight accommodation (including any associated sporting facilities) and
– don’t involve the use of a mechanically propelled vehicle (including road vehicles, boats and aircraft).

Alternatively, employers are often able to negotiate with local gyms and leisure centres to secure a discounted membership rate to pass on to employees – this can be up to 20% – 30% cheaper than the normal price. Depending on how the employer pays for the cost of the gym membership, the payment is either taxed as earnings or a taxable benefit-in-kind. So, for example, if an employer gives the employee additional salary to pay for their gym membership, the money is taxed as earnings through PAYE. If the employer pays the gym membership direct, a taxable benefit-in-kind arises on the employee and should be reported to HMRC on form P11D, or through the payroll.

Employers may wish to consider taking advantage of an existing tax exemption covering one medical check or health assessment per employee per tax year. The exemption applies only to employees (and not, for example, to family members unless they are also employees in their own right). Employers do not have to offer the medical checks to all employees to gain the exemption. An employer may provide, for a given employee in a given tax year, both one health screening assessment and one medical check-up. The exemption applies whether the employer pays for the services direct or whether the payment is by way of a non-cash voucher or credit token.

As fitness and health issues become increasingly popular, anything an employer can do to help is likely to be most welcomed by employees.

  • Latest news and testimonials

  • Latest News

    • September Q&A

      Q. I have two small businesses which are treated as a group for VAT purposes, so we only submit a single VAT return covering both …

      Read more
    • Making Tax Digital for Business: update

      In July, the Government confirmed that the Summer Finance Bill would be published in September, with the measures dropped from the pre-election Finance Bill being reintroduced …

      Read more
  • Testimonials

    • Partner – Solicitor

      I have worked with SBL over the last 10 years on numerous matters involving owner-managed business. They are professional, personable, knowledgeable and work incredibly hard to provide the best advice to their clients. I would have no hesitation in recommending SBL.

      Read more
    • Director – Networking Company

      SBL are a professional Accountancy Firm and are exceptionally up to date with all legislations.  SBL know their clients extremely well and what will work best for their business. SBL understands business and how business works and they deliver the very best considered professional advice.

      Read more
    • Director – Retail/Fashion Company

      SBL have provided auditing and other accounting services for our company for more than 10 years. They not only offered excellent support from a professional accountant company, but also delivered forward-thinking advice on how to improve our business.