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No Tax Exemption For Flu Vaccine Reimbursements

Although a PAYE Settlement Agreement would work ...


Posted by Roger Eddowes on 17/01/2022 @ 8:00AM

Every employer is concerned when flu season starts, and many want to protect their workforce from it. However, it's worth noting that differing methods of provision can have different tax consequences ...

As an employer you may want to protect your workforce with a flu vaccine program of your own!

As an employer you may want to protect your workforce with a flu vaccine program of your own!

copyright: klaushausmann / pixabay

Every year, millions of older or vulnerable individuals are encouraged to get a flu vaccination, especially as fewer people would have built a natural immunity to it thanks to the COVID-19 pandemic.

The NHS website says you're more likely to become seriously ill if you get both flu and coronavirus at the same time!

Flu vaccines are free thanks to the NHS with many GP surgeries rolling out regular flu clinics to ensure that those who need a jab get one, however, as an employer, you may also want to protect your workforce with a flu vaccine programme of your own.

If you arrange for vaccinations in your workplace or offer a voucher to obtain a jab from a pharmacy, the cost is usually tax-exempt as it is included under the trivial benefits rule.

However, during the pandemic, with so many staff working from home, it has been less practical for employers to offer workplace provision and there was a massive demand from voucher providers who couldn't keep up.

"So, what's a worried employer supposed to do?"

Many have encouraged staff to arrange their own flu vaccine (if not covered by the NHS rollout) and will reimburse the costs of getting it. But this reimbursement is not covered by trivial benefits, meaning employers must deduct both income tax (under PAYE) and Class 1 National Insurance contributions ... leaving the employee out of pocket.

To reduce this hassle, employers can use a PAYE Settlement Agreement to meet the Income Tax and NIC costs themselves, but this doesn't normally extend to cash reimbursements.

HMRC has confirmed that where a voucher scheme is unavailable, a PAYE Settlement Agreement can be used to meet any liabilities for their employees!

Although the government introduced a temporary exemption for reimbursement of COVID tests, HMRC is not looking to match that policy with flu vaccine reimbursements, so a PAYE Settlement Agreement is the easiest solution.

Until next time ...

Business Godparent


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About Roger Eddowes ...


Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.

Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.