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Fit for work: The new tax and NICs exemptions

In January of this year a new tax and NICs exemption crept on to the statute books that you could be forgiven for missing given the multitude of legislative changes that flood our consciousness, reports Kate Upcraft.

It’s for medical treatment in connection with a Return to Work plan (RtWP) provided by the Fit for Work service or another occupational health provider/in-house team. At the time the exemption came into effect on 1st January 2015, Fit for Work was very much in its infancy having only launched in December 2014 but now it is fully rolled out, so what are the criteria?

Fit for Work is the free occupational heath advisory service set up in England, Wales and Scotland using monies saved from the abolition from 6th April 2014 of the Percentage Threshold Scheme (PTS) that allowed employers with high levels of absence to recover their SSP from HMRC via the EPS. The review, Health at work – an independent review of sickness absence, was chaired by David Frost (then head of the BCC) and Dame Carol Black. Their view as that the PTS actively encouraged, particularly small employers, to ignore absence management given that SSP was fully state funded. Equally evidence suggested that once an employee had been off for a month this was the trigger point for an extended period of absence.

The government accepted the conclusions of the review and agreed to set up the Fit for Work Service (but not in Northern Ireland where such initiatives are a devolved matter). Of the 11m people off sick each year 900,000 are off for more than 28 days. This target group should now be routinely referred to Fit for Work by their GP if:


  • They have, or are likely to be, off for 28 days
  • There is the prospect of a return to work within three months
  • They have not been referred to the service in last 12 months
  • The employee consents to the referral

The service, staffed by specialist medical professionals, will contact the employee within two days and carry out a 45-minute telephone consultation (or face to face if this is more appropriate perhaps because the employee has difficulty using the telephone). As a result of the consultation a RtW plan (RtWP) is prepared and agreed with the employee that is only shared with the employer if the employee consents.

If there is no consent to the detailed suggestions about how a return to work could be facilitated, then the employer is simply sent the RtWP summary that acts as a Fit Note for SSP purposes and provides an expected return to work date within three months. Assuming there is consent, the employer (or whoever the employee nominated as their line manager) will be sent the RtWP. The suggestion will be more detailed than anything provided on a Fit Note and may include a recommendation of medical treatment such as counselling or physiotherapy. If the employer wants to assist with the return to work that is when the tax exemption kicks in.

Normally medical treatment would be a benefit-in-kind reportable on the P11D but the new exemption (legislated for as The Income Tax (Recommended Medical Treatment) Regulations 2014 SI 3227 and ITEPA s320C) allows for up to £500 per person per year to be spent by the employer as recommended on the RtWP, or by any other medical professional employed or engaged by the employer, without a benefit in kind being incurred. So anxious are the government that the exemption be utilised to get people off benefits and back into the workplace that even if the employee arranges the treatment and is then reimbursed (normally not acceptable as a pecuniary liability will arise) there is no benefit in kind. The qualifying criteria are:


  • That the assessment be carried out by a healthcare professional
  • Be provided in writing
  • Specifies the treatment

RtWPs are not like a traditional occupational health assessment as they are written as a plan of steps that the employee (and potentially the employer) can work with to get the employee back into the workplace more quickly.

As with suggestions on a fit note there is no requirement for the employer to follow the recommendations if they’re not commercially viable. To this end line managers should be made aware that they may well be contacted by the Fit for Work Service before a plan is finalised to talk through suggestions rather than the plan just landing out of the blue.

If the employee is unable to return to work before the end date on the plan, then a Fit Note must be supplied if SSP is to continue to be paid. Conversely if an employee is able to return to work ahead of the date on the RtWP they do not need to return to the GP to be ‘signed back in’ (GPs were absolved of the need to do that when Fit Notes were introduced).

If the GP does not make a referral after 28 days, the employer can also make a referral once 28 days’ absence has occurred. To facilitate employers making referrals HR teams need to have reviewed their absence policies to include a consent process ahead of a Fit for Work referral and have briefed line managers on what steps to take when they receive contact from the Service or receive a RtWP.