Call for government to reduce tax on private health benefits

EXCLUSIVE: Health and protection consultant Punter Southall Health and Protection Consulting (PSHPC) has called on the government to reduce tax on health benefits.

It comes during Cancer Prevention Week, which runs from 13 to 19 May.

PSHPC argued that if the government created more employer incentives to provide relevant support for employees suffering from cancer, this could massively reduce the financial burden on the employee when their focus should be on treatment and recovery plans.

John Dean, director at PSHPC, said: “In a society where our welfare state and the NHS are under such pressure and where we want to support employees who are impacted by serious ill health, the argument is clear: employer-funded health benefits need an advantageous tax provision to enable more employers to provide more support for their staff.

“For example, if a caring employer provides an income protection policy, which allows continuous salary in the event of serious ill health, the costs of this benefit are magnified by the fact that the sickness benefit is subject to income tax.

“So if the government wants employers to support ill employees, the simplest way to kick start an increase in private provision is to reduce tax on the benefit, which in turn would substantially reduce insurance premiums and the burden on the NHS and welfare benefits.

Life assurance is the most popular employee benefit in the UK, probably because it is tax free and so is the payment when someone dies.

“If the same tax treatment was applied to income protection we could see a real increase in the provision of this kind of benefit which will provide invaluable support to the long-term sick.”