Firms call for employee health tax incentives

As many as 2.8 million people in the UK are thought to be out of work due to long-term ill health.

This is hampering the country's economic growth, with over a third of businesses saying they have turned down growth opportunities due to labour shortages.

To address the issue, business leaders have called for a change to the health tax system.

Health and wellbeing support offered by employers helps people maintain their physical and mental health, ensuring they can remain happy and productive at work.

In a survey, 49% of firms said that tax reforms would incentivise investment in the health of their employees.

Employee health tax reform proposals

Ahead of the Autumn Budget on 30 October, business organisation the CBI is calling on the UK government to make Employee Assistance Programmes (EAPs) fully tax-free benefits, making it easier for employers to offer mental health and other support to their staff.

Further CBI recommendations include:

• Relax rules on tax relief for employer-funded medical treatment recommended by occupational health specialists.
• Remove the 'one per employee, per tax year' limit on tax-free health screenings and medical check-ups -- enabling firms in sectors like construction, agriculture and manufacturing to proactively tackle health risks that are greater compared to other industries.
• Introduce a new statutory tax exemption for adult vaccinations and virus and disease testing.
• Extend tax relief to all employee health and safety eye tests, glasses and contact lenses, whether worker or employer funded.

According to the CBI, the measures for EAPs and occupational health referrals alone could boost the economy by £2.65bn over the next four years.

'Indisputable case'

"A healthy economy needs a healthy workforce," said CBI chief executive Rain Newton-Smith. "We're seeing vast numbers of people unable to work due to ill health, at a time when firms are crying out for more talent. So, there is an indisputable case for business and government to work together to improve the health of people in work. Firms are keen to play a more proactive role in the health of their employees, but the tax system discourages it.

"Businesses tell us that the most effective measures for employee health interventions are those that are preventative. If health conditions are detected early, they can be treated more easily and at a lower cost, leading to less time off work."

Preventative care

Employers can choose from a wide range of health and wellbeing benefits that offer preventative support for employees' physical, mental, social and financial health, for example through regular health checks, telephone helplines, discounted gym memberships and incentives to join healthy-eating or fitness programmes, as well as offering help with financial planning and debt consolidation, and organising social events or supporting voluntary work.

"The goal should be to mitigate the number of sick days by prioritising preventative measures, but with rehabilitation readily available too," said Katharine Moxham, spokesperson for GRiD, the industry body for the group risk sector.

"Our research shows that preventative care can be overlooked by employers and therefore undersold to staff, but make no mistake, these seemingly straightforward measures can make a dramatic difference in absence rates and in staff performing to their best ability," Moxham added.

Employee satisfaction

Recent research from health cash plans provider Simplyhealth found that three in ten (30%) employers think communicating health cover benefits helped them attract new employees and retain their current workforce (29%). And employers report a marked improvement in employee satisfaction when health cover is provided, with 37% seeing an increase in employee engagement and 33% an increase in productivity.

"Employers who want to attract and retain top talent, keep their workforce healthy and improve business productivity should recognise the importance of offering health cover," said Paul Schreier, chief executive of Simplyhealth. "We urge the new government to acknowledge low-cost health cover as an effective tool to tackle in-work sickness and reduce the excessive tax burden placed on health cover products to incentivise take up by businesses."