|Under current rules, flu jabs will not result in a tax charge if employers pay for them directly or provide employees with a voucher. However, if instead an employee pays for the jab themselves, and then claims back the amount from their employer, the employee can end up paying tax.
Contractors operating through their own companies can issue themselves with a voucher as a 'trivial benefit'.
Jamie Presland of the Association of Taxation Technicians (ATT) said: "The exemption for flu jabs is because it is a trivial benefit – one that costs under £50.
"It is fine for the contractor in their own company to issue themselves with a voucher for a jab, however they need to be careful that this doesn’t take the total cost of trivial benefits provided to them by the company over the £300 cap that applies to directors of close companies (broadly defined as companies which are owned and run by fewer than five shareholders)."
However, the difference in tax treatment between a voucher and reimbursement has caused some concerns and it seems that the Government will be reconsidering this in a consultation.
The ATT has supported Government proposals to extend tax exemptions to cover a wider range of occupational health costs, including reimbursed flu jabs. It says the current system is 'counterintuitive' and equalising the benefit could drive a greater uptake of vaccinations.
Senga Prior of the ATT said: “We welcome making flu vaccine reimbursement tax free, something which the ATT and other professional bodies have been asking HMRC to consider for some time.
“The difference in tax treatment between vouchers and reimbursement makes little sense from a policy perspective, especially as the extra tax collected is likely to be small versus the costs to employers and the NHS of employees suffering from severe flu.
“The current system causes practical problems for employers who wish to provide flu vaccines, as vouchers are not always the right answer."
The consultation estimates that changes to the existing benefit in kind rules could cost tens of millions of pounds over the next five years, but the ATT says reimbursing flu vaccines is unlikely to have a big impact on the public purse.
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