New tax rules for health screening

Health screening must be offered to all employees once per year in order for tax exemptions to apply, according to new rules that come into effect next week.

An amendment has been made to the Income Tax (Exemption of Minor Benefits) Regulations 2002 which will come into force on 14 August 2007.

The tax exemption for staff will now apply only where health screenings are made available to all employees. Currently, there is normally a tax exemption on the provision of health screening even where employers limit its availability to certain employee groups.

Raman Sankaran, member services director at LHF, said: “My initial view is that any exemption for companies looking to provide health screening or any general healthcare benefit is a good thing. “

He said that there may be positive reasons behind the government pushing organisations to make health screening more widely available to staff. “If that is the intention behind it then it’s welcomed,” he added.

He said that from a cost point of view the only risk is that companies might opt not to provide health screening at all. However, he said that more cost effective products now on the market should make it more financially viable for employers to offer health screening to the wider workforce.

Sankaran also said that from his early understanding that the amendment means that health screening must be made available to all employees but not necessarily taken up by them all for tax relief, the changes could be positive for the cashplan market. He said: “If you take something like a cash plan that covers you for health screening, once that policy is in place it [health screening] is available to all staff, whether they choose use it or not is another matter.”

The amendments also state that tax exemptions on medical check-ups will only stand where the check-ups are made available to all employees or those who have been identified as at particular risk of ill health by a health screening.

Meanwhile it is believed that the row over whether certain services provided under employee assistance programmes will be taxable, will be resolved within the next few months with employer and provider guidelines being agreed.