Tax Implications for Employer-Provided Stress Treatment

Many employees whose companies pay for specialist treatment for stress may receive a tax bill as a result. This is because of the way the Inland Revenue exercises discretion over the taxation of benefits provided through company-wide Employee Assistance Programmes. While cost-effective, company-wide schemes are often exempt from taxation, individual and expensive treatment is more likely to be assessed for tax.

Key Takeaways:

• The Inland Revenue exercises discretion over the taxation of benefits provided through company-wide Employee Assistance Programmes, often exempting them from taxation.
• Individual and expensive treatment is more likely to be assessed for tax, with a finance director suffering from depression and alcoholism being a likely example.
• Benefit consultants argue that stress treatment for employees in high-stress jobs, such as rescue services, should not be taxed, as it is directly linked to the job.
• The HSE believes that 200,000 employees a year suffer from work-related stress.
• The Health and Safety Executive will issue its first set of stress guidelines later this year, providing explicit recommendations for employers.
• Martin Kaye of Stoy Hayward believes there is a strong case for exempting work-related stress treatment from taxation.
• Employee Assistance Programmes are available to all employees at a fairly low per capita cost to the company.

Statistics:

• 200,000 employees a year suffer from work-related stress, according to the HSE.
• The Inland Revenue exempts medical screening, redundancy, and outplacement counselling and treatment from in-house doctors or specialist counsellors.

Sources:

• NEASA MACERLEAN EMPLOYEES
• Inland Revenue
• Health and Safety Executive (HSE)
• Stoy Hayward
• Martin Kaye