Promoting employee health and wellbeing is increasingly seen as a vital part of a successful business. According to government figures, 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. There are several areas where employers can use tax breaks and exemptions to help promote health and fitness at work.
Larger organisations are often able to offer gym or leisure facilities for staff in the workplace (or at a location convenient to work) run either by the organisation directly, or by a third-party provider. The facilities can be offered to employees to access for free or on a paid-for basis.
In-house gym facilities may be provided tax and NIC free if the following conditions are satisfied:
- the facilities must be available for use by all employees, but not to the general public;
- they must be 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);
- the facilities must not be located in a private home, holiday or other overnight accommodation (including any associated sporting facilities); and
- they must not involve use of a mechanically propelled vehicle (including road vehicles, boats and aircraft).
Where an employer is unable to provide in-house gym facilities, it may be possible to negotiate favourable membership rates with a local gym or leisure centre. Whilst this may lead to a tax liability for employees, the preferential rate can often be up to 20% – 30% cheaper than the normal price, so this is still an attractive offer for employees. Depending on how the cost of the gym membership is funded, the fees will either be taxed as earnings or as 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
Tax-breaks to promote good health
It’s a well-established fact that a healthier workforce is a more productive workforce. The government recognises these benefits too and has introduced several tax breaks to promote good health.
A tax and NIC-free exemption allows employers to fund one health-screening assessment and/or one medical check-up per year per employee. Subject to an annual cap of £500 per employee, employer expenditure on medical treatments recommended by employer-arranged occupational health services may be exempt for tax and employee NICs. ‘Medical treatment’ means all procedures for diagnosing or treating any physical or mental illness, infirmity or defect. Broadly, in order for the exemption to apply, the employee must have either:
- been assessed by a health care professional as unfit for work (or will be unfit for work) because of injury or ill health for at least 28 consecutive days;
- been absent from work because of injury or ill health for at least 28 consecutive days.
Employer-funded eye, eyesight test, and ‘special corrective appliances’ (i.e. glasses or contact lenses) may also be exempt for tax and NICs, providing certain conditions are satisfied.
Fitness and health issues inevitably become more popular following several weeks of seasonal festivities and the dreaded over-indulgences. Anything an employer can do to help employees beat the post-Christmas bulge is likely to be most welcome.