Tax breaks for employee protection ‘a no-brainer’ says MP

Tax breaks that incentivise employers to look after the  health of their staff and protect their income are ’a  no-brainer’, Heather Wheeler MP told a round table  briefing at the House of Commons on Tuesday.

Speaking at an event sponsored by Unum and the Institute  for Social and Economic Research, Wheeler said she  supported the idea of tax breaks, but was less keen on the  notion of reducing the disincentive to protect one’s own  or one’s employees’ income created by means-tested  benefits.

Jack McGarry, chief executive of Unum UK said  means-testing made group income protection a tough sell,  and suggested the government should disregard at least  some of the income secured by those who took the trouble  to protect their income to make the situation less  unpalatable to employers considering the product.

Dame Carol Black said the review she co-authored with  David Frost CBE called for very limited tax breaks, for  basic rate taxpayers and limited to spending on  occupational health, because the Treasury was almost  certain to reject anything more substantial. But she added  that of all the review’s proposals, tax changes were  arguably the least likely to be taken up.

Wheeler said: “We will ponder what is the downside for  pushing the Treasury for tax incentives on this, because as far as I am concerned it is a no brainer.

“But I do not see the government having any incentive to  say you are going to get the disability allowance and the  insurance payment on top. I prefer the idea whereby the  state says ’We’re not going to let you keep your benefit,  but we are prepared to spend a lesser sum of money in tax  relief so that you provide for yourself so we do not have  to pay it.’”

Dame Carol Black said: “We didn’t ever tried to push the  group income protection. And the senior civil servants who  lead the review, Donna Ward, had worked in the Treasury.  She felt we should work towards matching what the  employers told us would make a difference. We saw it has  targeted at a limited group of people to help them get  back to work .

“We decided to see where we could make the case for tax  changes based on what employers are saying they would take  up. We are talking about the situation where employers  were saying, and hopefully we can believe them, ’we have a  valuable worker and we like to get him a scan or some  physio, and we would do this if we did not have to pay a  benefit in kind.

“You could say that of all of our recommendations it is the one that might run into the buffers first.”

Andrew Selous MP, parliamentary private secretary to DWP  secretary of state Iain Duncan Smith, said: “As a  government we are very much in listening mode and we want  to get this right.”