Section 55: Exemption of Benefit Consisting of Health-Screening and Medical Check-Up
Summary
1.Section 55 amends sections 266(3) and 267(2) of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA) and inserts a new section 320B into the Act. The effect of these changes is to exempt from tax the provision to employees of one health-screening and one medical check-up each year. They also exempt from tax the provision of a non-cash voucher or credit-token used to facilitate the provision of such health-screening assessment or a medical check-up.
Details of the Section
2.Subsection (2) amends section 266(3) of ITEPA which sets out a list of tax exempt benefits in respect of which the provision of a non-cash voucher does not give rise to tax liability under Chapter 4 of Part 3 of ITEPA. Subsection (2) amends this provision by adding a new sub–paragraph (g) covering health-screening assessments and medical check-ups that meet the conditions laid down in the new section 320B. The effect of this is to remove the tax charge that would otherwise arise where the employer arranges for the provision of these medicals by means of non-cash vouchers.
3.Subsection (3) amends section 267(2) of ITEPA. Section 267(2) sets out a list of tax exempt benefits in respect of which the provision of credit tokens does not give rise to tax liability. Subsection (3) amends this provision by adding a new sub-paragraph (i) covering health–screening assessments and medical check-ups that meet the conditions laid down in the new section 320B. The effect of this is to remove the tax charge that would otherwise arise where the employer arranges for the provision of these medicals by means of credit tokens.
4.Subsection (4) inserts new section 320B into ITEPA. New section 320(B)(1) exempts from tax the provision to an employee of one health-screening assessment and one medical check-up. New section 320B(2) restricts the exemption to one health-screening assessment and one medical check-up provided by an employer in a tax year. Where the employee has more than one employer at the same time, the tax exemption will only apply to one health-screening assessment and one medical check-up provided by any of them.
Background Note
5.It had long been the stated practice of HM Revenue & Customs (HMRC) that where an employer provides their employees with a periodic health-screening or a medical check- up it should not be considered a taxable benefit.
6.HMRC introduced the Income Tax (Exemption of Minor Benefits) (Amendment) Regulations 2007 (SI 2007/2090) to formally exempt from tax the provision of health-screening and medical check-ups that are made available by employers to all their employees. However, the power that was exercised to introduce these regulations contained a restriction that meant that for the exemption to apply the medical had to be generally available to all employees on similar terms.
7.HMRC accepts that SI 2007/2090 could adversely affect the tax-free status of check-ups provided by some employers to less than the full workforce (for example only to staff in a particular age group) for good medical or business reasons. This section meets this difficulty by exempting from tax the provision of one health-screening assessment and one medical check-up in any tax year but without the condition requiring these medicals to be offered to all employees. This means that where an employer restricts qualifying health assessment screenings or medical check-ups to part of the workforce they will be exempt from tax. The section also exempts from tax non–cash vouchers and credit tokens provided for qualifying health–screenings and medical check-ups. By virtue of the Income Tax (Exemption of Minor Benefits) (Revocation) Regulations 2009 (SI 2009/695), SI 2007/2090 will cease to have effect once this Section is enacted (with or without modifications).
