Health Screening and Medical Check-ups - Formal exemption from tax liabilities

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It has long been the stated practice of HMRC that, where employers provide employees with health screening or a medical check up, the benefit should not be considered as taxable. However, this view has recently been called into question and HMRC now considers that a tax charge might arise on such provision.

For the avoidance of doubt, and to ensure fairness across the workforce, it has been decided to introduce regulations to formally exempt from tax the provision of health screening and medical check ups where certain conditions are satisfied. The exemption comes into force from 14 August 2007.

The conditions are that

the provision is limited to one health screening and to one medical check-up each year
health screenings are available to all employees, and
medical check-ups are available to either
- all employees, or
- those employees who have been identified in a health screening as requiring a medical check-up.

A "health screening" is defined as an assessment to identify employees who might be at a particular risk of ill health

A "medical check-up" is defined as a physical examination of an employee by a health professional which is limited to determining that employee's state of health.

By formally exempting these benefits from tax, there is automatically an exemption from Class 1A NICs. However, there is no automatic exemption from Class 1 NICs if the benefits are provided by means of non-cash vouchers. To prevent a Class 1 NICs charge, new Regulations have also been made, also effective from 14 August 2007, that exclude the provision of non-cash vouchers to obtain health screening and medical check-ups, where the conditions of the tax exemption are met, from being treated as payments in kind.

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Further information:
Income Tax (Exemption of Minor Benefits) (Amendment) Regulations 2007
Explanatory Memorandum to the Income Tax (Exemption of Minor Benefits) (Amendment) Regulations 2007 and Explanatory Memorandum
The Social Security (Contributions) (Amendment No. 6) Regulations 2007
Explanatory Memorandum to The Social Security (Contributions) (Amendment No. 6) Regulations 2007