Welfare counselling services

Produced by Tolley in association with Paul Tew

The following Employment Tax guidance note Produced by Tolley in association with Paul Tew provides comprehensive and up to date tax information covering:

  • Welfare counselling services
  • What is tax exempt counselling?
  • Welfare counselling
  • Outplacement counselling
  • Counselling Services not covered by the tax exemption
  • Determining the conditions for exemption
  • Benefits provided after the employment ends
  • What are other potential reporting requirements to HMRC?
  • NIC
  • PAYE settlement agreement (PSA)
  • More...

Welfare counselling services

Welfare counselling services, also referred to as Employee Assistance Programmes (EAP), include a range of facilities or treatments available for the benefit of employees. These services have been increasingly offered by employers to help employees in times of difficulty. The provision by an employer of counselling facilities to an employee usually represents a taxable benefit. However, in certain circumstances, welfare counselling provided by an employer for their employees is exempt from income tax.

What is tax exempt counselling?

Welfare counselling

An income tax exemption to cover certain minor benefits is set out in ITEPA 2003, s 210. The statutory tax exemption for welfare counselling is conditional on the benefit being made available to the employer’s employees on generally similar terms, ie a benefit will not qualify for an exemption where it is offered to selected employees only.

There is no legislative intention that all conceivable types of welfare counselling should be exempted from tax. The type of issues the exemption is intended to cover includes:

  1. stress or ill-health

  2. problems at work (including conduct and disciplinary matters)

  3. debt problems

  4. alcohol and other drug dependency

  5. career concerns

  6. bereavement

  7. equal opportunities

  8. ill-health

  9. sexual abuse

  10. harassment and bullying

  11. personal relationship difficulties

All the component parts of a welfare counselling scheme need to be covered by the exemption in order for the entire scheme to be tax exempt. From 6 April 2020, counselling may include services which are also medical treatment such as CBT (cognitive behavioural therapy)

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