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Steve Herbert

Jelf Employee Benefits

Head of Benefits Strategy

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Hidden in the noise? Key Budget take-aways for HR professionals

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This article was written by Steve Herbert, Head of Benefits Strategy at Jelf Employee Benefits.

Every year The Chancellor’s annual budget statement is reduced by the media to only a few headline messages. This year is no different, with help for homebuyers, personal tax thresholds, and a penny off the pint all trending as the key subjects.

But hidden by this noise were two new items which are of significance to HR professionals:

1) Health-related interventions

A major challenge to both the UK economy and employers is the cost of absence. A Government commissioned report, The Sickness Absence Review, recently provided some recommendations on how best to tackle this issue.

Earlier this year, and in response to this report, the Government announced the launch of an Independent Assessment Service (IAS) in 2014. Employers and employees will be able to access this service for free after an employee had been absent for four weeks, with the IAS expected to provide return to work advice to both parties, and also providing signposts to appropriate medical related interventions to speed up this process. A decision on whether the medical treatments would be incentivised via tax-incentives was delayed until the March 2013 budget.

Tucked away in Mr Osborne’s document was the following sentence:

“The Government will also introduce a targeted tax relief so that amounts up to a cap of £500 paid by employers on health-related interventions recommended by the service are not treated as a taxable benefit-in-kind”.

This is extremely welcome news, and may well encourage more employers to actively engage with providing health-related employee benefits to many more of their employees.

Yet the detail of which benefits will benefit from this relief remains unclear. A consultation on this point opens soon, and it’s to be hoped that Government does not limit tax relief to only corrective medical treatments. Prevention is more cost effective than cure, and one of our surveys found that less than five percent of employers found Rehabilitation services the best way of controlling sickness absence, compared to 31 percent who favoured Healthcare policies in this respect.

It will be important that HR practitioners make their voice heard in the forthcoming consultation to ensure that any tax reliefs are best targeted to reduce Sickness Absence levels.

2) Childcare Vouchers

Another announcement was the introduction of a new system to support parents with the cost of Childcare from 2015. This new support will be partially funded by the scrapping of the existing Childcare Voucher schemes provided by many employers. Given this, some organisations may be tempted to simply withdraw their current scheme now as an administrative simplification. Yet this could be an unwise decision for employers.

Although the take up of such schemes is often relatively low, those that do utilise the offering will be benefiting by up to £900 per parent, per year. To suddenly remove this subsidy in these difficult times could cause real financial pain for your employees, and may even make work financially unviable for some.

It’s also worth being aware that the proposed replacement for Childcare Vouchers has some significant differences to the existing system, and some families will be potentially worse off under the new system. To mitigate this concern it has been indicated that savers to existing schemes will be able to continue their current membership even after 2015 if it is beneficial for them to do so. It’s therefore important that the existing schemes are maintained to retain this option for employees.

Finally, and not least, it’s worth keeping in mind that the changes are still more than two years away and may yet be subject to significant change between now and the implementation date.

Despite being drowned out by the other noise, there are clearly some very important potential milestones in the Budget for HR to consider. It will be interesting to see the final detail on both the above topics, but for the moment it would be prudent for organisations to allow for these potential changes when making decisions around employee benefits.

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Steve Herbert

Head of Benefits Strategy

Read more from Steve Herbert
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