UK employers call for health tax reform to ‘alleviate pressure on NHS’

Coalition argues tax-exempt occupational health offering would better support staff wellbeing

The next government should stop treating occupational health (OH) services as a benefit-in-kind and make them tax exempt, a coalition of UK employers has said.

The Working Well Coalition, spearheaded by the John Lewis Partnership, represents companies with a total workforce of more than 450,000 in the UK and includes large employers such as Unilever and Tesco. 

Currently, OH services are treated as a taxable benefit by HMRC and are therefore subject to income tax and national insurance, which means employers could pay a tax rate of more than 40 per cent. 

Sir Charlie Mayfield, chair of the John Lewis Partnership, told the Financial Times that if employers “work with government on this, then the potential prize is great”. 

“By encouraging more businesses to invest in worker health, we can help to take pressure off the NHS, help millions of workers and boost UK productivity,” said Mayfield. 

The group argued that OH services provide care and support for staff with physical or mental health issues, which can alleviate pressure on the NHS. It advised that employers could support a tax exemption by offering free high-quality OH services, as well as promoting good management practices and work-life balance. 

Get more HR and employment law news like this delivered straight to your inbox every day – sign up to People Management’s PM Daily newsletter

Sir Cary Cooper, president of the CIPD and professor of organisational psychology and health at Alliance Manchester Business School, said if employers wanted to create a wellbeing culture, they should first do an audit of their business to find out the causes of employee ill-health.

“Stress, anxiety and depression are the leading causes of absence,” he said. “[Employers] should find out what is causing people stress in the workplace, as well as whether line managers are creating a mini-culture that does not enhance people’s wellbeing.

“There are lots of things [employers] can do, but it has to be a strategic issue. They must also enable people to work flexibly, rather than offering it and then undermining them if they take it.” 

The Working Well Coalition sent an open letter to the government in July, emphasising that employers have an important role to play in the rapidly changing world of work. It highlighted that mental health and MSK conditions were the two biggest causes of workplace absence, after minor illness, accounting for more than 43 million lost working days per year – and said four in five UK workers claimed that support from their employer could help them recover quicker. 

The government subsequently opened a consultation into reducing ill-health related job loss. The coalition’s October response to the consultation stated: “Mental health should be put on an equal footing in government policy and not treated in siloes. There also needs to be recognition of support for fluctuating conditions.”

Nick Pahl, chief executive of the Society of Occupational Medicine – which is also part of the coalition – previously raised concerns with People Management that reforms would become about tax breaks for OH. “There is a risk that the government produces some minor tax tweak and declares ‘job done’ in this area… It is very important that the breadth of proposals in the consultation are not replaced by just [tax breaks],” he said.