Budget – Tax break for return to work interventions unveiled

The Government is taking forward the recommendation from Dame Carol Black and David Frost’s independent review of sickness absence that tax relief should be offered for return to work interventions.

The Budget also confirmed that the Government will abolish the Percentage Threshold Scheme and recycle funding into creating the health and work assessment and advisory service for those in danger of long-term sickness absence.
The new targeted tax relief will be introduced so that amounts up to a cap of £500 paid by employers on health-related interventions recommended by the service are not treated as a taxable benefit in kind.
The Government will consult on implementation later in 2013.
In his Budget speech Osborne said: “Companies that look after their employees, and help them return to work after periods of sickness, will get new help through the tax system.”
Katharine Moxham, spokesperson for Group Risk Development says: “We are pleased that the Government has recognised that interventions targeted at minimising absence (or speeding employees’ return to work) should be encouraged rather than penalised as they provide much needed support for employees as well as saving both employers and the State significant amounts of money in the longer term.
“The Group Risk industry has many years’ experience of supporting employers with vocational rehabilitation. Financially astute employers will, of course, continue their health, wellbeing and support programmes to ensure return on investment plus an incentivised, productive and well supported workforce but relief on interventions will encourage many more employers to consider such programmes. The Government has clearly recognised the crucial role of the employer in helping employees return to work as quickly as possible and that additional support is needed to help them facilitate this.”
Axa PPP Healthcare sales & marketing director James Freeston says: ‘We welcome the government’s decision to introduce targeted tax relief up to £500 paid by employers for treatment of ill or injured workers to speed their recovery back to health and back to work.It’s a big step in the right direction and shows the government’s commitment to the principle that, by and large, work is good for people, for their families, for business and for society.
“The change should encourage employers to work in partnership with employees and healthcare providers to play a bigger part in improving management of sickness absence and in cutting the needless flow of people out of work and on to ill heath related benefits.
“We look forward to the government’s forthcoming consultation on implementation and to seeking opportunities to introduce products and services that meet the new tax relief requirements. Indeed, we know from experience that targeted rehab cover that pays for treatment of employees whose illness or injury is stopping them from doing their job can expedite their recovery and return to work – especially employees affected by two of the main causes of long term sickness absence: musculoskeletal disorders and psychological problems such as stress, anxiety and depression.”
Aidan Kerr, assistant director, head of property and health, ABI says: “The ABI welcomes the measures announced by the Government in today’s Budget that will help employers to better manage the health and wellbeing of their employees. The ABI has for some time made the case for tax disincentives to be removed  for companies that pay for treatment targeted at getting their people back to work, as it will reduce levels of sickness absence, enhance productivity and help to stop people from unnecessarily falling out of employment.”
Aviva UK Health medical director Dr Doug Wright says: “Aviva welcomes the Government’s decision to support return-to-work interventions through tax relief specifically for medical treatment and rehabilitation that is recommended by the new health assessment service.
“We know that tax relief is cited by employers as the most important factor that would help them introduce more health and wellbeing initiatives, and today’s announcement will ensure that support is given to employers in a targeted way to get their sick employees back to work, which in turn will reduce the financial burden of sickness absence on UK businesses and the economy.”
Unum head of public Affairs and CSR John Letizia says: “It is very refreshing to see such a clear statement of intent from the government on the issue of sickness absence. Targetted tax relief for businesses, for health interventions and rehabilitation will have a real impact helping businesses keep experienced and highly-skilled employees in work, which is vital given that long-term sickness absence costs British business £3.1 billion per year according to Unum’s research.
“However, while we applaud ministers for acting on the recommendations of the Frost / Black Review, we think they could go further. The wording of today’s statement suggests only standalone treatments will qualify for tax relief, once they’ve been recommended by the independent assessment service. However employers can invest up-front in services such as Income Protection, which not only provide return-to-work support, but also offer financial protection for staff if they are absent for extended periods. Including such up-front provision by employers swould help the policy be implemented to best effect, and we hope the consultation process will provide an opportunity to address this point.”