Push to Change Benefits in Kind Legislation

The Institute of Directors (IoD) is pushing for significant changes in how businesses handle the health and wellbeing of their employees. This comes amidst concerns that not enough is being done to support occupational health in the workplace, particularly in smaller businesses that may not have the resources of their larger counterparts.

Understanding Benefits in Kind (BiK)

Firstly, it’s essential to understand what “Benefits in Kind” are. These are essentially benefits that employees or directors receive from their employer that are not included in their salary or wages. They’re often referred to as ‘perks’ or ‘fringe benefits’ and can include anything from company cars and health insurance to childcare provision.

Currently, many of these benefits are taxed, which means they’re treated as income and, therefore, not as attractive for employers to offer. However, the IoD is urging the government to consider more exemptions for occupational health services in the BiK tax rules.

The Disparity in Health Services Provision

According to the IoD‘s research, there’s a substantial divide between small and large businesses when it comes to providing occupational health services. Their survey, conducted from August 11 to 30, 2023, revealed that while an impressive 95.4% of large employers (those with 250+ employees) provide these services, only 41.5% of smaller businesses (those with 2-9 employees) do the same.

The reasons for this gap are primarily down to cost and necessity. Nearly half of the employers not providing these services (49.4%) stated that occupational health hasn’t been an issue for them, and 43.4% mentioned prohibitive costs. It seems that for small businesses, in particular, the financial burden is a significant barrier.

The Push for Expanded BiK Exemptions

Here’s where the IoD’s proposal comes in: they’re advocating for an expansion in the range of occupational health services covered by BiK exemptions. This means that these services would be more tax-efficient for employers to provide, thereby making them more accessible and appealing.

This isn’t just about employee perks, though. The IoD believes that increasing investment in occupational health could be a crucial factor in combating economic inactivity and addressing the ongoing skills and labour shortages plaguing various sectors in the UK. Essentially, healthier employees could mean a healthier economy.

A notable 41% of business leaders surveyed supported this idea, acknowledging that expanded BiK exemptions would likely be the policy change that would most encourage them to increase their investment in occupational health services.

The Road Ahead

In her commentary, Alexandra Hall-Chen, the IoD’s Principal Policy Advisor for Employment, emphasised the importance of using the tax system as a tool to empower employers to cater to their employees’ health needs, rather than prescribing one-size-fits-all solutions.

The full response from the IoD to HM Treasury’s consultation is available for public view, providing more in-depth insights into their findings and recommendations.

In the end, the IoD’s call to action highlights a critical point: investing in the health and wellbeing of the UK workforce is not just a matter of improving individual companies — it’s about bolstering the entire economy. As the government considers these proposals, only time will tell if these tax incentives become a reality and bring about the change that the IoD and business leaders are hoping for.