Budgeting for Employee Healthcare Costs in the UK
We anticipate that the significant increase in insurance premium tax that was announced in the UK Summer Budget on 8 July will encourage many more employers to explore corporate healthcare trusts. IPT will increase from 6% to 9.5% from November 2015. This will apply to employee health insurance policies like all other UK insurance products. Corporate healthcare trusts are a way of providing healthcare benefits to employees other than through insurance. Instead of paying premiums to an insurer, the employer pays cash into a trust for the benefit of its employees. The trustees then pay for medical treatment or reimburse employees for medical expenses which have been incurred. As the tax saving that these structures generate is to increase by more than 50%, it might be music to the ears of the FD!
On the other hand, if employee health insurance is provided through a flexible benefits package, it may now be subject to increased HMRC scrutiny as a result of the review of salary sacrifice arrangements also announced as part of the Budget.