Thousand face tax charge for flu jabs, warns ATT

Thousands of people face tax charges if they pay for their own flu vaccine instead of receiving a voucher from their employer, the Association of Taxation Technicians (ATT) has warned. 

Around 20 million Brits receive the jab each year, with many employers choosing to cover the cost for their employees.  However, exactly how the employer pays for a jab can change the tax treatment.

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.

The ATT has now backed 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, Chair of the ATT Technical Steering Group, 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. Some schemes require a minimum number of employees or are closed to new entrants, and not all employees can access the same provider because for example they work remotely or are not near the applicable chain of pharmacies.”

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.

Senga Prior added:

“The estimated cost needs to be set against the potential benefits of increasing welfare and well-being in the work force as well as the NHS savings of reducing long term health problems.

“Allowing reimbursement of flu vaccinations to be tax free is unlikely to result in material costs to the Exchequer. The cost of vaccination is relatively low, £12 at some supermarkets, and we suspect many employers are already incorrectly treating reimbursement as exempt as they are not aware of the current, counterintuitive policy.”