Your company can provide its directors, secretaries, and employees with tax free health benefits.
It’s important to know what ones are taxable and which ones are tax free.
The taxable benefits come with an income tax charge for the receiver and a national insurance charge for the employer. There may also be a restriction on a tax deduction for the company.
Tax-free and tax deductible health benefits list
Tax free benefits come with no further taxes to pay and get a tax deduction for the company.
- First aid and medical treatment after an accident at work.
- Annual health screening and a medical checkup. It can be included if you have retired from work. Must be offered to all employees or those identified for medical checks due to health screening.
- Health insurance and medical treatments when working outside the UK. The Treatment must be provided outside the UK, and the need for that treatment must arrive outside the UK.
- Work-related welfare counselling, such as cognitive behavioural therapy and interpersonal therapy, does not include any treatments or advice on:
- finances (other than debt),
- leisure and
- Up to £500 of medical treatment in a tax year. It must have been recommended by an occupational health service to allow you to return to work when asses unfit or absent for 28 continuous days or more. ‘Medical treatments’ for diagnosing and treating physical or mental sickness, infirmity or deficiency.
- Eye tests when needing to work with computer screens and spectacles or contact lenses required solely for computer use that an eyesight test shows are necessary
- Spectacles are for general but include a special prescription for computer use. A proportion of the cost relating to the special prescription will be tax-free.
It is best to pay the providers directly from the company and ensure the costs are charged to the company, not you as an individual.
Taxable health benefits list
Taxable benefits come with an income tax charge for the receiver and a national insurance charge for the company.
- Health Insurance
- Dental Insurance
- General medical treatment over £500 in any tax year to help you get back to work or not as a result of a workplace injury
- Reimbursing the cost of a flue vaccine (alternatively, it can be provided tax-free as a trivial benefit if the company pays)
- Cost of an eyesight test, spectacles or contact lenses reimbursed to you (you have paid for them and not your company)
- Spectacles for general use, including use with a computer, which do not include a special prescription for computer use
- Personal trainers or fitness/wellness classes of any description, e.g. yoga
- Gym memberships
Generally, you will find it cheaper in taxes to provide taxable health benefits outside a company, but as I say, in the world of tax, it is always best to crunch the numbers first.
Your company can provide small but essential tax-free benefits if you cannot work.
The hardest thing is to attribute blame to a workplace injury. If you have a bad back due to working and have a qualified medical report to support your grievance, anyone will unlikely challenge that.
Stress counselling due to work pressures is a valuable tax relief that should not be overlooked.
Eye tests and glasses cause a common misunderstanding among dentists. Remember, only glasses for computer screen use, not mixed or other use, qualify as tax-free.