Chapter EIM21845
| Published date | 22 May 2014 |
| Record Number | EIM21845 |
| Court | HM Revenue & Customs |
| Issuer | HM Revenue & Customs |
The provision by an employer of counselling facilities to an employee represents a chargeable benefit, but in certain circumstances welfare counselling provided by an employer for its employees is exempt from tax.
The exemption is tightly drawn and there is no intention that all conceivable types of welfare counselling should be exempted from tax. The type of subjects the exemption is intended to cover includes:
- stress
- problems at work
- debt problems
- alcohol and other drug dependency
- career concerns
- bereavement
- equal opportunities
- Ill-health
- sexual abuse
- harassment and bullying
- conduct and discipline
- personal relationship difficulties
For the purposes of this exemption welfare counselling is counselling of any kind except:
- advice on finance, other than advice on debt problems, or
- advice on tax, or
- advice on leisure or recreation, or
- legal advice
Previously, the provision of all forms of medical treatment were excluded from this exemption. From 6 April 2020 this is no longer the case. From 6 April 2020, employer provision of counselling services which are also medical treatments, such as Cognitive Behavioural Therapy or Interpersonal Therapy, are no longer a taxable benefit where these services are provided to the employee as part of the employer’s welfare counselling services.
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Employee Assistance Programmes (EAP)Where welfare counselling services - sometimes called Employee Assistance Programmes - include a range facilities or treatment, some of which fall outside the scope of the exemption, strictly the exemption does not apply to any of the services provided because the exemption does not include any basis for an apportionment of the benefit. Consequently all the component parts of the programme need to be covered by the exemption in order for it to be exempt from tax and NICs.
It follows that if there are some services provided under an EAP which clearly satisfy the terms of the exemption, and others that clearly do not, it makes sense for the two sets of services to be separated - if possible into entirely separate schemes - so that one is exempt from charge, whilst the other represents a benefit to the employees who avail themselves of the facility.
However, if it is not possible to separate the services in this way, common sense should be applied where the welfare counselling provided by an employer consists substantially of facilities that satisfy the terms of the...
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