Tax Advice

Promote employee wellbeing with these allowable expenses

30 Apr 2019

Nearly two thirds (63%) of UK employees experience stress in their jobs, according to research into workplace happiness by Happiness Works.


Of those who find their roles demanding, nearly one in ten say their job was very stressful.


Given the high-levels of stress among UK employees, organisations are introducing wellbeing initiatives to support the physical and mental health of employees at work.


Our team of tax accountants have conducted a great deal of research to show employers the most tax-efficient ways to promote employee well-being and look after the mental health of their team.


Nearly half of businesses offer tools designed to promote wellbeing in the workplace, with one in seven providing stress management seminars or training and annual leave for personal and mental wellbeing.


Overall, 17% of businesses have introduced counselling, while a further 17% have started to allow employees to leave work early on a Friday and 11% are limiting the amount of overtime that employees can do.


Starting a wellbeing programme may come at a cost but health and happiness go hand-in-hand.


Creating a working environment that encourages good health fosters a more stable workforce. It also helps facilitate better team relationships, which in turn drives employee satisfaction, performance and morale.


At a time when organisations are experiencing a shortage of skilled workers, UK businesses are also looking to create agile work environments that provide a better work experience and improve staff loyalty.


Alongside 17% introducing flexible working policies, organisations are rethinking how the design of the workplace impacts health, wellbeing and productivity.


One in seven employers have developed ergonomic workplaces and supply healthy food or drinks.


To promote healthy behaviours, UK employers are also turning to new measures that encourage physical wellbeing.


One in five have introduced company bicycle or cycling schemes, followed by 15% subsidising gym membership, as well as 10% providing sporting and fitness tools, such as fitbits or step counters, that encourage employees to be active.


It’s important to remember that employees are an organisation’s most important asset.


Those companies that promote and protect workers’ health are building a culture dedicated to the overall wellbeing and happiness of employees.


These businesses are likely to see higher levels of staff engagement and productivity, helping them become more successful and competitive in the long-term.


Allowable expenses that promote employee health

For employers, it is important to note that there are schemes you can put in place without being out of pocket as a result.


The following health benefits can be claimed against your tax bill as an allowable expense:


Bike To Work

The scheme is really straightforward: employers buy bikes and lease them to employees to cycle to work on.


The employees choose the bike and accessories (usually with a £1000 limit) and you recoup the bike cost though employee salary sacrifice (a monthly deduction from gross salary for the duration of the Hire Period).


The employee spreads the cost and makes savings on their tax contributions; 32% for standard rate tax payers and 42% for higher rate taxpayers. As an employer, you make a 13.8% saving through National Insurance Contributions.


As an employer, lending or hiring bikes to employees doesn’t count as an expense or benefit - as long as they’re available to all employees and mainly used for getting to work.


Training

The cost of training can be quite a significant expense for many businesses – whether it is the training of the owner of the business, or training for employees.


It might seem obvious that such expenses are an allowable deduction for tax purposes, but unfortunately the position is not quite as simple as that.


Tax relief will not normally be given if an employee is paying for their own training, even if the purpose of the training is to help them improve in their job.


However tax relief will be given if an employee needs the training to do their job – if it is ‘wholly, exclusively and necessarily incurred’.


So the costs will not be deductible unless the training is necessary – for example, training for an employee to carry out a new job would not be deductible.


On the other hand, where training is paid for by the employer, the tax situation is different.


On the whole, training which enables employees to better do their jobs will be allowable. This even includes general training which may not have an immediate impact on their work.


Working from home

If you provide equipment, services and supplies to an employee who works from home, you don’t have to report or pay anything if they’re only used for business purposes, or any private use is insignificant.


Furthermore if you cover the cost of additional household expenses for an employee who works from home, you don’t have to report or pay anything if all the following apply:


  • they need to work from home, either because equipment they need isn’t available at your workplace, or their work means they have to live too far away from your workplace to travel there every day

  • the amount you give them isn’t more than their additional household expenses

  • the amount you give them isn’t more than the current weekly limit


Counselling

According to HMRC, as an employer, you don’t have any tax, National Insurance or reporting obligations if you provide welfare counselling services for your employees.


This is based on the fact that the counselling is for welfare issues, such as bereavement, ill health or stress, problems at work, sexual abuse or personal relationship difficulties.


The counselling service can’t offer tax advice, legal advice, financial advice on any matter other than debt problems, advice relating to leisure or recreation, medical treatment or technical guidance.


Notably, the provision has to be made by the employer. This means the employer is responsible for providing the service.


If an employee arranges it themselves it is a personal cost and nothing to do with your employer. There is no provision to allow an employee to claim tax relief on such costs that they incur.

  

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