EIM21765 – Particular benefits: cost of health screening, periodic medical check-ups and eye tests

Medical check-ups

Do not treat expenses incurred by the employer in providing periodic medical check-ups for employees, as conferring a chargeable benefit on those employees. If an employer incurs expenses in providing check-ups for members of an employee’s family or household this represents a benefit chargeable on the employee unless the family or household member is also an employee of the employer who provides the check-up ( EIM20505).

Section 210 ITEPA and S.I. 2007 No. 2090

The paragraph above describes a long standing non-statutory HMRC practice. From 14 August 2007 this practice was replaced by a statutory exemption (S.I. 2007/2090) under regulations laid under Section 210 ITEPA to exempt from charge minor benefits. But see below for details of announcements made by HMRC in October 2007 and March 2008.

Under the terms of the Statutory Instrument, if an employer provides for an employee up to one health screening and/or medical check-up per year, the cost of provision is exempt from charge as an employment-related benefit as long as

• the health screening is generally available to all employees, and/or
• the medical check-up is generally available to all employees, or to all employees identified in a previous screening as needing a check-up.

Not all employees have to take up the option to undergo health screening and/or a medical check-up, but all employees must have the opportunity to do so. There is no requirement that all employees should receive the same screening and/or check-up, or that the screening/check-op should be made available at the same intervals for all employees.

“Health screening” refers to an assessment to identify employees who might be at risk of ill health. “Medical check-up” refers to a physical examination of an employee by a health professional which is limited to determining the employee’s state of health.

If the screening and/or the check-up results in the employee being provided with medical treatment, the exemption does not apply to any treatment that is subsequently made available.

The exemption applies for 2007/08 onwards. However where screening and/or check-ups took place between 6 April and 13 August 2007, on the basis of the previous guidance at EIM21765, HMRC accepts they were exempt from tax even if at that time the check-ups or health screening weren’t generally made available to all employees. Consequently the requirement that screening and/or check-ups should be available to all employees took effect from 14 August 2007 and not from 6 April 2007.

No tax or NICs liability for 2007/08 or for 2008/09

However, following a number of representations, HMRC was concerned that some existing health schemes could be affected by the new regulations in a way that was not envisaged when the regulations were laid. HMRC wanted to discuss the issues arising from the regulations with employers and their representatives to find a way forward that meets the needs of both HMRC and employers.

Consequently on 15 October 2007 HMRC announced that for 2007/08 it will not seek to collect tax and NICs in respect of health screening and/or medical check-ups, if there would have been no tax or NICs payable on the basis of the non statutory treatment in force before 14 August 2007.

HMRC announced in March 2008 that it was still considering the many responses received on this issue and would announce the outcome of those deliberations as soon as possible. In themeantime HMRC extended the concession not to collect tax that is due as a result ofthese regulations to cover the 08/09 tax year

Section 320A ITEPA 2003

Where an employee is required to use a visual display unit (VDU) as part of his or her normal duties, no chargeable benefit will arise on:

• an eyesight test, and
• the cost of spectacles or contact lenses required solely for VDU use that an eyesight test shows are necessary where

the test is required under Health and Safety at Work regulations and, if shown to be necessary by the test, the corrective appliances (e.g. glasses and contact lenses) are available generally to employees.

Where spectacles are for general use, but include a special prescription for VDU use, a proportion of the cost relating to the special prescription will be exempt from a chargeable benefit.

The provision or payment towards the cost of spectacles for general use, including use with a VDU, which do not include a special prescription for VDU use will give rise to a taxable benefit.