Update: in the March 2011 budget, the Chancellor said that the situation regarding the taxation of EAPs would be reviewed in the summer. You can read the industry’s view on the EAPA website. Our information at present (December 2011) is that the tax situation is not likely to change.
It is important to note that the situation outlined below still holds until or unless there are changes made by this review.
HM Revenue and Customs (HMRC) issues guidelines concerning the tax status of employee assistance programmes (EAPs).
There had been some discussion about the status of legal and financial information services. Crucially, the guidance clarifies that both can be included within a tax-exempt employee assistance programme (EAP) as long as they are provided within a mental health model and are restricted to a signposting service (i.e. putting a framework around the issue such that the individual feels able to cope and to take the required next steps in resolving their issue).
Worklife Support is satisfied that our legal and financial services conform to this tax-exempt definition.
Some of the rules governing what is allowed have been tightened. For example, there will be a limit on the number of repeat calls to the financial and legal services about the same issue and some restriction on access to EAP services by family members.
We have undertaken a full review to identify any changes that we need to make to help our customers ensure compliance and have amended our service specification, contract and promotional material as a consequence. We anticipate that the impact of the guidance on our overall service will be minimal.
Anyone considering buying an EAP should check the configuration of the offering to check that the service could be deemed to be a taxable benefit.
Contact us if you have any questions or comments.
