Government rethink over tax on health screening

HEALTH SCREENING

Government rethink over tax on health screening

Fears that tax changes to health screens would lead to a reduction in the numbers using them have forced the government to cancel plans to tax the benefit, at least for now.

Initially, plans were in place to introduce legislation that required employers to offer health screening and medical check-ups to all employees if they wished to claim it tax-free. But many in the industry, including Bupa, have lobbied the government to reconsider this, arguing that it would lead to employers simply restricting the benefit to their most valued employees.

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Changes proposed

The original changes were made in the form of an amendment to the Income Tax (Exemption of Minor Benefits) Regulations 2002 and came into force 14 August 2007. The HM Revenue and Customs (HMRC) originally maintained that the tax exemption for staff would apply only where health screenings are made available to all employees on an employer-funded basis. Previously, there was a tax exemption on the provision of health screening even where employers limited its availability to certain employee groups.

Clarification

A recent statement issued by the HMRC, however, explained its new position by saying it was: “Concerned that some existing health screening schemes could be affected in a way that was not envisaged at the time the regulations were made.”

It added: "HMRC want to discuss the issues arising from the regulations with employers and their representatives in order to find a way forward that meets the needs of both HMRC and employers on this matter . . . In the meantime, for 2007/08, HMRC will not seek to collect tax and NICs in respect of health screening and/or medical check ups where it would not have been payable on the basis of the previous non statutory treatment."

Consultation

HMRC has now published plans to consult on issues of concern around the new tax rules. It is writing to employers and their representatives that have expressed misgivings about the changes and has invited comments via email by 4 January 2008.

Want to know more?

For more information on the HM Revenue and Customs position and how to become involved in the consultation visit www.hmrc.gov.uk/employers/employers-checkups.htm