The Government should use the upcoming Budget to remove tax barriers that discourage employers from investing in the health and wellbeing of their workforce, according to leading independent insurance consultancy Broadstone.
A package of measures could be implemented to make it easier and more affordable for businesses to provide preventative healthcare and wellbeing support to employees.
Broadstone’s recommendations include:
Removing Insurance Premium Tax (IPT) from health insurance products
Introducing tax relief or reductions in employer National Insurance contributions for workplace health and wellbeing programmes that meet agreed standards
Providing targeted grants or subsidies to help smaller employers invest in workforce health.
The calls come as the Government looks to tackle rising levels of long-term sickness and economic inactivity through the Keep Britain Working agenda. Employers are increasingly playing a critical role in helping workers access preventative healthcare, early diagnosis, mental health support, rehabilitation and treatment.
Private medical insurance (PMI) and other employer-funded health benefits may help employees access diagnosis and treatment more quickly, potentially supporting earlier intervention and reducing the risk that some health problems result in prolonged absence from work.
However, the current tax framework can increase the cost of providing these benefits and reduce the incentive for businesses to invest. Most UK health insurance premiums are subject to the standard rate of IPT, currently 12%. Employer-funded PMI is also generally a taxable benefit for employees, subject to limited exemptions, and the employer will normally pay National Insurance on the value of the benefit.
Reducing the tax burden on employer-funded healthcare could recognise the wider economic value of keeping people healthy, productive and economically active, according to Cara Spinks, Head of Life & Health at Broadstone. She commented: “The Government has rightly identified long-term sickness and economic inactivity as major challenges for the UK economy. If employers are expected to play a greater role in prevention and early intervention, they need the right incentives to do so.
“Removing IPT from health insurance would be a practical first step, while wider tax incentives could encourage more employers to invest in workplace health and wellbeing. Targeted support for smaller businesses would also help ensure these benefits are not confined to the largest employers.
“The Budget is an opportunity to make the tax system work with, rather than against, the Government’s Keep Britain Working ambitions.”
These proposals would complement the recommendations of the independent Keep Britain Working Review, led by Sir Charlie Mayfield, which argues that employers should take a leading role in preventing ill-health and disability from resulting in avoidable job loss and long-term economic inactivity.
By reducing the cost of workplace health provision, the Government could encourage earlier intervention and improve access to treatment. Where support is effective and appropriately targeted, it may help businesses retain employees who might otherwise leave the workforce because of ill-health.
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