Government back-tracks on health screen tax changes

The government has back-tracked over its move to tighten up the tax exemption on health screening following pressure from employers and providers.

The HM Revenue & Customs (HMRC) has said in a statement on its website that for 2007/08 it will not collect tax and national insurance contributions on health screening and medical check-ups where it would not have been necessary under the legislation prior to the introduction of new regulations in August. It has has published plans to consult on issues of concern around the new tax rules which provided that the exemption from tax only applied to benefit where it had been supplied to all employees on an employer-funded basis.

The HMRC’s statement said: “Following a number of representations, HMRC is concerned that some existing health screening schemes could be affected in a way that was not envisaged at the time the regulations were made.”

The HRMC is writing to employers and their representatives that have expressed concerns about the changes and has invited comments via email by 4 January 2008.

The changes were made in the form of an amendment to the Income Tax (Exemption of Minor Benefits) Regulations 2002 and came into force on 14 August 2007. The HMRC originally maintained that the tax exemption for staff would apply only where health screenings are made available to all employees on an employer-funded basis (see†Government tightens tax on health screens). Previously, there was a tax exemption on the provision of health screening even where employers limited its availability to certain employee groups.