Government’s failure to include health and protection tax breaks in its Keep Britain Working Review, while disappointing, may not have all that much of an impact on firms’ desire to keep these benefits in place.
This is according to advisers Health & Protection spoke to following last week’s confirmation from the Departments for Work and Pensions and Business and Trade that tax policy will remain outside of the scope of its Keep Britain Working review.
The confirmation scuppered hopes that government will use the review to implement tax breaks for workplace interventions such as private medical insurance (PMI), group income protection or other health-related services.
Disappointing to see
While welcoming the government’s focus on improving workforce participation, Santé Group told Health & Protection it was disappointing that tax policy has been ruled out of scope.
“The health and protection industry has long advocated for tax incentives to encourage employers to invest in workplace health solutions,” it said in a statement.
“The economic case for supporting employer-funded health and protection benefits is clear. Enabling businesses to provide these services more affordably would not only reduce the burden on the NHS but also enhance workforce productivity, reduce absenteeism, and support faster returns to work.
“With long-term sickness at record levels, now is the time for a bold and proactive approach. If the government is serious about tackling economic inactivity, then tax incentives for employer-led health interventions should be part of the conversation. We urge policymakers to reconsider this position as the review progresses.”
Rate not a concern
But according to Emma Wood, director of healthcare at Broadway Insurance, none of her clients are whingeing about the 12% tax rate.
“It’s never been an issue and I get that employer national insurance contributions have gone up, but again, I’ve not had anyone say to me they can’t afford PMI because we’ve got to pay extra national insurance,” Wood said.
“So it’s difficult for me to say.
“At the moment, most pressing to the client is they want to do something for the whole of workforce – what can we do? Can we see a benefit for things like that?
“It’s more about what they can do with the policy to keep it affordable and sustainable long term.
“The other thing is nobody can pull these benefits out. They’re in people’s contracts so it’s more about tailoring those plans to meet the needs of the employees, but remain sustainable cost wise long term.”
Value added services driving demand
And Britney Trussler, protection manager at Dynamo noted that the value-added services attached to income protection policies are a key driver for customers to take out cover at the moment.
“Our top product at the moment is income protection,” Trussler said. “There definitely is an influx in that area at the moment.
“There are a lot more people that I speak to are opting for that over your life insurance.”
Trussler added that there has been a lot more education around the fact that these products include the GP services and everything else.
“Given what’s going on with the NHS, I’ve had someone contact me simply because they can benefit from something like that because they have been on a therapy wait list for eight months now,” she added.
“So I definitely think there is an appetite for the education we’re getting out there on those products.
“Even though that isn’t the reason we want them to look at them, it’s an avenue that gets them to come across so they can have that discussion.”
