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Technical updates - Published 18th February 2014

Tax-Free Benefits of Workplace Wellness Incentives

We all know that a healthier workforce is a happier and more productive workforce. As well as fewer lost days through sickness, motivation is generally higher when people feel well and are empowered in their work. The Government also sees the advantages of a healthy workforce and provides a number of tax breaks to help employers promote wellbeing in the workplace.

So if you want to show your employees how much you care, here are a few tax-efficient benefits that any employer could provide.

Employee wellness programs

Cycle to work schemes are particularly popular with companies that employ staff from the local community. Improved facilities, such as cycle lanes, and Britain’s success at the Olympic Games and Le Tour de France have fuelled renewed interest in cycling. If introduced correctly, employees can save up to 42% of the cost of a bike. The employer also benefits in cash terms because National Insurance savings should comfortably outweigh any cash flow disadvantages.

Another way to keep your workforce healthy is through free annual health screenings and checks. Normally these would be chargeable to tax as a benefit in kind, but if you comply with certain conditions they will qualify for tax-free status.

Similarly, good eye health is important, especially for people who carry out intricate tasks or spend a lot of time working at a computer. Most employers provide eye tests as a tax-free benefit and under certain conditions corrective glasses may also be provided.

Unfortunately, even the healthiest people can succumb to injury or illness, and prolonged absence has a serious impact on the running of any business. Fortunately, since 1 January 2015 a new tax-free benefit has been available to help employees returning to work. If they have been assessed by a health-care professional as unfit for work for at least 28 days, the employer can pay up to £500 in a tax year for recommended medical treatment to speed up their recovery.

Previously, this type of support would have resulted in a taxable benefit in kind. So far we have only considered tax-free benefits. However, taxable benefits such as gym membership, medical and dental cover should not be overlooked. Often employers can negotiate preferential prices or terms that an individual could never secure on their own.

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