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<p>Employers normally incur expenditure on employee healthcare for a business purpose
and can deduct this when calculating the employer’s own taxable profits.</p><p>However,
from 1 January 2015, the Government also exempted any benefit in kind or payment of
earnings, up to an annual cap of £500 per employee, from a charge to income tax when
an employer meets the cost of recommended medical treatment. There is also a corresponding
National Insurance contributions disregard.</p><p>Medical treatment is recommended
where it is provided in accordance with a recommendation from an occupational health
service in order to help an employee return to work after a period of absence due
to ill-health or injury. The 28 consecutive day qualifying period makes sure that
the tax exemption is targeted at those cases in greatest need of support. Evidence
showed that sickness absence cases lasting four weeks or longer were at the greatest
risk of turning into long term cases.</p><p>The Government ensured that this exemption
would be easy to understand and administer, so employers do not need to inform HMRC
about payments for treatments covered by the £500 per employee per year limit. This
means that information is not available to assess the direct impact of the exemption.
However, the Government estimated in 2014 that employees working for approximately
10,000 businesses each year would benefit and Table 2.2 of Budget 2014 set out the
expected cost to the Exchequer of £20 million per annum by 2018-19.</p><p>The Government
keeps all taxes under review.</p>
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