Any changes to tax incentives for occupational health need to centre around the return to work and what works best for the end customer.
This is according to Swiss Re who spoke to Health & Protection about their submissions to government’s consultations ‘Occupational Health – Working Better’ and ‘Tax Incentives for Occupational Health’ which both closed on 12 October.
Swiss Re technical manager Ron Wheatcroft (pictured) also revealed the reinsurer is calling for an increase in the £50 exemption for benefits in kind, and for the benefit under an individual income protection policy to be regarded as earned income when assessing entitlement to Universal Credit.
Swiss Re also used their submissions to back a call for mandating employers to publish details on their sick pay arrangements as part of their Report and Accounts.
Need for precision and consistency in tax rules
“When it comes to things like tax changes, we really do need precision in the tax rules. That’s one big thing for us across both consultations,” Wheatcroft told Health & Protection.
“We also think that the tax rules also need to be consistent between occupational health, which medicalises a problem in some ways, and vocational rehab which is much more about supporting people back to work, return to work plans etc.
“In our view the definition needs to be sufficiently tight that it encompasses both. If it doesn’t do that, there’s a risk of some sort of tax arbitrage either one way or the other when really the occupational health and the vocational rehab can and should work perfectly well together.
“What drives it should be what’s best for the customers rather than will I get a different tax treatment if I go this way as opposed to that way.”
Joanna Scott, technical and industry affairs manager at Swiss Re, told Health & Protection an upcoming challenge the reinsurer has seen in the government consultations is occupational health is just one aspect of the services offered to employees, yet it is the main focus of both papers.
“You can also have vocational rehab, group PMI and NHS services which can help people get back to work and stay in work,” Scott said.
“If you focus purely on occupational health which can include health assessments and advice and things like that or opinion to get you back to work and assess your fitness to work, it removes the focus away from other services that also could be provided through insurance – such as an employee assistance programme and vocational rehab – which can provide tailored, proactive services which should not necessarily be excluded from the whole dialogue with government.
“If we’re looking at it from the outcomes point of view of helping people stay in work and get back to work, vocational rehab definitely will do that as well.”
Increase in benefit in kind exemption
But Wheatcroft also pointed out that the Swiss Re submission also calls for an increase in the benefit in kind exemption.
“What we have commented on the tax side is the benefit in kind exemption which currently stands at £50,” Wheatcroft continued. “If the cost of a benefit in kind is £50 or lower than no benefit in kind exists. It is not taxable. We’re suggesting that the £50 be increased.
“Our thinking when we looked at this one initially was about how SMEs could be incentivised to do more for their workers.
“So if there was a way in which they could provide paid for schemes for their workforce without incurring a p11d tax charge, where they probably have got no experience of doing so in the past.
“As it’s voluntary benefit, you have to go and check with each employee whether they want the cover or not. So our view was if you were to increase the limit then that would be an encouragement to smaller firms in particular.
“I’m sure it would have some benefit for larger firms as well, but we do think it would be a way of increasing the potential coverage in the market particularly for benefits like critical illness and cash plans.
“And it would probably make some difference for PMI as well. It was more about SMEs and products that they may wish to buy and keeping it really simple. If it’s not simple, then it’s going to put people off.”
Universal Credit assessments
Wheatcroft explained Swiss Re’s response calls for the benefit under an individual income protection policy to be offset as earned rather than unearned income when assessing entitlement to Universal Credit.
“Under an individual policy because the benefit is taxed as unearned income, it can be offset pound for pound when assessing entitlement to Universal Credit. This can hit lower earners hardest.
“So we’re suggesting is that for the purposes of assessment, it’s treated as earned income in the same way that the proceeds of a group insurance policy or salary would be.
It just means that the treatment would be consistent between an individual policy and from a policy that is paid as continuing salary. We think that would be consistent. It does help particularly with some cases where potentially you could lose 100% of the benefit.”
Backing sick pay publication in company accounts
Finally, Swiss Re’s submission also backs earlier calls for employers to be required to publish their sick pay arrangements in their accounts.
“One of the other things we have put forward as well is something that was covered in the Building Resilient Households Group and CII report which proposes mandating employees to publish details on things like their sick pay arrangements as part of their Report and Accounts.
“We think that has lots of benefits. It’s good for employees. It’s good for shareholders. It’s arguably part of their ESG reporting and it’s just a good way of being open in communicating.
“If they do it well, it should be an incentive for recruitment purposes. We are absolutely supportive of the position that the CII and Building Resilient Households Group took on that.”