HM Revenue and Customs (HMRC) has published its proposals for the tax relief to be applied to employer funded return to work interventions.
The relief will be capped at £500 per employee per year and applies to National Insurance Contributions (NICs).
Employees will need to be absent (or expected to be absent) for at least 28 days to qualify for the tax relief and the treatment must be recommended by the Health and Work Service (HWS) or a healthcare professional.
These qualifying professionals are listed as registered medical practitioners, a registered nurse, or an occupational therapist, physiotherapist or psychologist registered with the Health and Care Professions Council.
The government added that it recognised sometimes treatment would be undertaken if the employee had just returned to work or was able to return during the process.
It said that in such circumstances the tax relief may still apply.
For example if treatment commenced shortly after an employee returned to work - this would usually be expected to be within 14 days of an employees' return. Or if an employee returned to work once treatment had started and while it continued.
The draft regulations are being introduced as part of the Finance Act 2014 and follow from the initial proposal put forward by Dame Carol Black and David Frost in the Sickness Absence Review.
Their paper also recommended the establishment of the Health and Work Service which is due to launch its first phase later this year after the appointment of Health Management to operate it.
HMRC said that employers must retain relevant records such as attendance records, Fit Notes (including those that indicate an employee ‘may be fit') and return to work plans or equivalent documents from employer-arranged occupational health providers to provide evidence that all relevant criteria have been met and that the tax exemption applies.
HMRC added that it would provide guidance on the exemption and the qualifying criteria before the regulations came into effect.
The consultation on the rules will close on 15 October.
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