EAPs are an intrinsic part of group risk products, but how do you assess them? What are the tax implications? Paul Avis explains.
Under the Income Tax (Earnings and Pensions) Act 2003: “An exemption conferred by such regulations is conditional on the benefit being made available to the employer’s employees generally on similar terms.” This suggests it is important for all, not just insured employees, to have access.
HMRC guidance on allowing access by the employer for non-employees, e.g. expanding EAP support to family members and dependants, is also set out. It states that the exemption does not extend beyond the employee concerned.
However, in recognition of the fact that employees may sometimes be affected by family and relationship difficulties, limited services (including couple or family counselling) can be provided to an employee’s dependents by the employer’s EAP, yet still remain within the welfare counselling exemption.
As well as limiting the dependant’s support that can be provided without affecting the P11d exemption, legal advice is restricted and must be co-related to any emotional issues supported by the EAP.
HMRC acknowledges it may be difficult to distinguish how and at what point the advice from the EAP changes into wider advice on legal issues. It advises that common sense should be applied where “the fundamental problem is covered by the terms of the exemption”.
HMRC has agreed with the EAPA that legal information provided within the context of welfare counselling for employees will not prevent the P11d exemption from applying, as long as it remains within the agreed guidelines, but legal support cannot be extended to family or dependants.
Ensuring value from EAP
As long as all employees, not just those insured, are covered there are some dynamic ways employers can ensure value from an insurer EAP. The key is having an effective communications programme.
Throughout the year there are specific opportunities to promote the use of EAP: National Walk to Work Week or Healthy Heart Week are great times to promote physical health. And how about remembering debt advice in January, when the bills start to hit?
