Lack of clarity on health screening forces tax review

Healthcare providers have welcomed HM Revenue & Customs’ (HMRC) decision to hold off enforcing new tax rules on health screening due to the lack of clarity over their actual impact.

Their comments follow an exclusive online story broken last month by Employee Benefits that HMRC has backtracked over its move to tighten up tax breaks on health screening and medical check-ups.

Dudley Lusted, head of corporate healthcare development at Axa PPP Healthcare, said: “It wasn’t clear as to what was and wasn’t allowed.”

HMRC has now said that for 2007/08 it will not collect tax and national insurance contributions on health screening and medical check-ups where this would not have been necessary under the legislation prior to the introduction of new regulations in August. In the meantime, it will consult on the impact of the new tax rules which provide that the exemption from tax only applies to the benefit where it has been supplied to all employees on an employer-funded basis.

HMRC is writing to employers and is inviting comments by email before 4 January 2008. The move also reflects market concerns that the tax changes would have resulted in employers dropping the benefit completely. Raman Sankaran, member services director at LHF, said he hoped the review will lead to a position of compromise.