Taxing wellbeing initiatives will not help the Government in its bid to reduce stress and depression

2nd August 2007

Plans by HM Revenue & Customs (HMRC) to tax employee assistance programmes (EAPs) will not help the Government in its bid to reduce stress caused by financial concerns and should be scrapped, according to the Chartered Institute of Personnel and Development (CIPD)...

Charles Cotton, CIPD Pay and Benefits Adviser says: “CIPD research shows employers are increasingly focusing on the wellbeing of their workforce. However the large majority of employers operating an employee assistance programme (EAP) would consider withdrawing it if it becomes a taxable benefit.

“Taxing EAPs just doesn’t make sense. It could destroy the Government’s attempts to improve the financial understanding of the population and reduce stress caused by debt. The HM Revenue & Customs (HMRC) needs to recognise that EAPs are not usually used by the wealthy for legal and financial advice but by those on lower earnings.

Also, splitting the financial and legal elements from the other parts of an EAP would also be a headache for providers. If an employee calls a helpline because they are stressed and then wants to talk about their finances and debts, it wouldn’t make sense for the helpline provider to end the conversation because that could be the clinical root of their problem.

Employee assistance programmes can play an important part in an organisation’s wellbeing strategy; and while they might not be used by all employees, for those that do they can be a godsend.”

CIPD research findings: 

• CIPD’s 2007 Absence Management survey (based on responses from 819 employers) finds 31% of organisations operate an employee assistance programme as part of their wellbeing strategy.
• The CIPD carried out a poll to find out what effect the recent HMRC proposal to tax EAPS would have on employers (255 employers responded). The poll finds:
  – 86% of those operating an EAP say that they would consider withdrawing it if it became a taxable benefit
  – 83% of employers that do not already operate an EAP are planning to introduce one the next two years. However, 74% say that they would revise their plans to introduce one if EAPs become a taxable benefit.

Eric Marshall, Chairman of EAPA and Financial Director of PPC Worldwide says: “Nothing within the employee assistance programme (EAP) service can be seen as delivering a monetary benefit so how can they justify a tax? The legal and financial services provided within an EAP are offered within a mental health model to help people cope with their concern and find a way forward.

“As well as the presenting problem, people using our helpline will often have a secondary and tertiary issue which are all related. Therefore, to try and separate out services from an EAP would undermine the intrinsic value of being able to access multiple services for multiple faceted issues.”

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