Guidance for employers participating in the government’s Fit for Work scheme clarifies the tax exemption available on the cost of medical care for employees who are off sick.
Fit for work, guidance for employers, published by the Department for Work and Pensions (DWP) on 2 January, confirms that the tax exemption for medical interventions is limited to £500 per member of staff for each tax year. However, any payments over the £500 limit will be liable for tax and national insurance contributions (NICs) on the excess.
The exemption, which came into effect on 1 January, can be granted more than once if the treatment straddles the start or end of a tax year.
Under previous rules, the cost of any medical intervention funded or provided by an employer was likely to be liable for tax as either a benefit in kind or a payment of earnings.
The guidance also made the following key points:
- Employees must provide consent at all stages of the assessment process.
- Staff will be contacted within two working days of a referral to the service, and face-to-face assessments (when required) will take place within five working days of the judgment being made. Where employees are required to travel to such an assessment, a travel allowance may be claimed from the service provider.
- The rules for referral from an employer may be more rigorous than a referral from a GP. For an employer to make a referral, the employee must have been absent for four weeks due to illness, whereas the GP can refer an employee who is likely to be absent for four weeks.
- Employees will be discharged from Fit for Work when they have returned to work (including a phased return to work), when the service can no longer offer further assistance or if a return to work has not been possible after three months.
Steve Herbert, head of benefits strategy at Jelf Employee Benefits, said: “The publishing of this document does not indicate that the Fit for Work service is yet fully on stream, and it provides the clarification on some useful extra information that was not entirely evident before.
“Yet the document does allow employers an insight into the practicalities of using the service, and also allows organisations to plan how their absence management policies could be altered to reflect inclusion of this option.”
The Fit for Work guidance stated that the primary referral route for the service will be the employee’s GP, rather than the employer.
Also, where a return-to-work plan is issued by the Fit for Work scheme, the plan can be used as evidence of sickness absence in the same way as a fit note issued by a GP. The employer will not need to ask the employee for a fit note as well.