Proposals in Finance Bill 2014 are set to exclude small businesses from making use of reliefs for income tax and and NICs, available on employer contribution of up to £500 for medical teatment say Harris & Co accountants Northampton
The Association of Taxation Technicians (ATT) is warning that new proposals to offer tax exemptions for employer expenditure on recommended medical treatment for their employees risk discriminating against small businesses.
Under plans announced in the Finance Bill 2014, employers will be able to apply for relief from income tax and National Insurance Contributions (NICs) on contributions of up to £500 each year per employee for treatment which is recommended either by the government’s new Health and Work Service (HWS) or by the employer’s occupational health service.
In its submission to the consultation on the draft legislation, the ATT says the provisions are too complex and restrictive, particularly as they co-incide with the abolition of the Percentage Threshold Scheme (PTS), which the association describes as a ‘straightforward and user-friendly system’ allowing employers to claim back part of the Statutory Sick Pay they have paid when sick leave reaches a certain level.
Yvette Nunn, ATT president, said:
‘For larger employers, who operate or arrange their own occupational health service, it may work well but smaller employers will have to refer their employees to HWS. We don’t yet know how that will work but it is unlikely to be as responsive or focused as an inhouse service. If employees have to wait days to be seen, the take-up may be very limited.’
Nunn pointed out that it looks as if the relief will only apply if the employee is expected to be off work for at least four weeks, meaning that if an employee is signed-off for two or three weeks with a bad back, the relief would not apply to the cost of treatment such as physiotherapy funded by their employer. In such circumstances, the ATT argues it should be left to the good sense of employers as to whether it is appropriate to fund medical treatment rather than stating that a minimum period of sick leave is required before for qualifying for help.
‘It will be particularly damaging for smaller businesses that HWS itself is being funded by the abolition of the PTS. Many small employers currently benefit from that scheme. When PTS is abolished in autumn 2014, sick leave will become more expensive for employers. If it is difficult for their employees to make use of the new tax exemption, smaller employers stand to miss out twice.’