Jelf brands absence of tax breaks for IP as ‘madness’

Jelf has warned that many of the key recommendations of the Sickness Absence Review are unlikely to ever be realised and called its decision to ignore income protection (IP) as ‘madness’.

However the employee benefits consultancy suggested the industry was making headway in persuading the report's authors to widen the range of people and products included in its recommendations.

Speaking at the consultancy's Employment seminar, Steve Herbert, head of benefits strategy at Jelf, commended many of the Review's elements but feared they may not see fruition.

He also noted that the strategy around tax breaks for employee benefits was confused and described the decision to excluded income protection (IP) as ‘tosh'.

"I like where the Sickness Absence Review was going but I'm not sure all of the aims will be achievable," he said.

"Because its independently-written, it's a little bit more objective than the government would have liked, but I do have some significant reservations about what's in it and I don't think lots of it will work.

"But there are some keys in there that could work.

"We all accept that long-term sickness absence is bad news - its bad news for employer and equally bad news for the employee and their family."

Herbert raised concerns with the suggestions to create a national independent assessment service (IAS), a job brokering service and reforms of the fit note system.

He explained the £13m annual budget for the IAS was unlikely to be sufficient and feared that if service levels dipped or became poor quality it would very quickly be left to die.

And he noted the extension of the fit note requirements to cover possible work activity were not likely to be embraced by GPs.

However Herbert's greatest priority was with addressing the introduction of tax breaks for medical insurance, rehabilitation and other services for basic rate tax payers.

"I don't understand why they should only be for basic rate tax payers," he said.

"When I tackled one of the authors they said there was no real thinking behind this, they just decided its right, but its not.

"And when it goes to consultation I and many others in the industry will be batting very hard to point out that that is a mistake.

"Tax breaks should be for everyone (as they have been in pensions) if we want to embed these things in our culture."

Finally, Herbert criticised the exclusion of income protection for the tax breaks.

"Nothing is currently envisaged for IP which is madness - this is talking about long term sickness absence.

"Yet this report almost washed away IP - it said the high paid have all got it and the low paid won't benefit from it, that's tosh.

"And I think we're starting to win that battle, I think they are starting to accept that IP should also have tax breaks," he concluded.