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<p>The Government recognises the valuable work of employers such as the John Lewis
Partnership in providing for the health of their staff.</p><p> </p><p>Employers have
a critical role to play in helping disabled people and people with long-term health
conditions to remain in work. Keeping more people in work is good for them. But it
is good for the economy too, and it reduces spending on out-of-work benefits, and
potentially also demand on the NHS. For employers, investing in employee health and
wellbeing can lead to increased workforce productivity and help retain key talent
in an organisation.</p><p> </p><p>Employers normally incur expenditure on employee
healthcare for a business purpose and can already deduct this in full when calculating
their taxable profits under the longstanding general rules for business expenses.
This means employers already receive full tax relief for these costs. The Government
therefore does not believe that the existing tax system for business expenses incurred
by employers provides a barrier to those wishing to support employees at work.</p><p>
</p><p>The tax system also ensures employees do not pay income tax or National Insurance
Contributions (NICs) on several employer-provided, health-related benefits and there
is no corresponding Class 1A NICs liability for employers when there is an exemption
for income tax. This includes recommended medical treatment of up to £500 intended
to help employees return to work.</p><p> </p><p>This particular exemption is targeted
at supporting individuals who are expected to reach or who have already reached four
weeks of sickness absence. This is because evidence suggests there is an increased
likelihood of employees moving on to benefits after an absence lasting four weeks
or longer. The £500 cap is in line with the estimated annual cost of the medical treatment
that would typically be recommended to help employees return to work.</p><p> </p><p>In
July, the Government launched a consultation on measures to reduce ill health-related
job loss. The broad focus of this consultation chimes with recommendations in the
John Lewis report, including potential financial incentives to encourage more employers
to access occupational health services, driving early and supportive employer action
and spreading best practice. However, it also notes that there is limited evidence
that making the tax treatment more generous is the most effective lever to incentivise
more employers to start offering occupational health provision, if the initial cost
is the main barrier for them.</p><p> </p><p>The Government will use the evidence and
views gathered during this consultation to develop its proposals further, considering
an approach which offers the best value for money and is affordable in the context
of the next Spending Review.</p>
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