Joshua Leigh & Co

Health screenings – A tax-efficient employee benefit

Many employers are on the lookout for new means to attract talent to their business in an increasingly competitive labour market, but many aren’t aware of annual health screenings and their tax-efficient benefits.

Unlike many benefits offered to employees, these are often free from Benefits in Kind, meaning that, under the right circumstances, they are exempt from income tax and National Insurance contributions (NICs).

Why health screenings are so attractive

Employers are able to provide one health‑screening assessment per employee per tax year and one medical check‑up per employee per tax year without creating a taxable benefit‑in‑kind (BIK).

Where this exemption applies:

• There is no income tax liability for the employee
• There are no Class 1A NICs for the employer
• The benefit does not need to be reported on a P11D

This makes health screenings a highly efficient reward compared with many other benefits.

Health screenings and medical check-ups

To understand what is and isn’t tax-exempt, you have to first appreciate how HMRC distinguishes between two types of preventative health benefits:

Health-Screening Assessments – This assessment is designed to identify employees who may be at risk of ill health. This commonly includes:

• Health and lifestyle questionnaires
• Telephone or digital health assessments
• Risk‑profiling exercises that may lead to further investigation

The purpose is early identification, not diagnosis or treatment.

Medical Check-ups – This involves a physical examination carried out by a qualified health professional to assess an employee’s general state of health.

Importantly, a medical check‑up does not have to be preceded by a health‑screening assessment to qualify for exemption.

Medical checks linked to a subsequent or existing treatment do not fall within the exemption.

The exemption offered by HMRC is fairly flexible and includes the provision of:

• Non‑cash vouchers
• Digital credits or tokens
• Access via wellbeing platforms

These are permitted as long as they are only used for a qualifying health‑screening assessment or medical check‑up within HMRC’s defined limits.

What is not covered by the exemption?

While the rules are generous, there are important limitations that employers need to account for:

Family members and household members – If an employer pays for screenings or check‑ups for an employee’s spouse, partner, or family member, the cost is taxable, unless that individual is also an employee.

Medical treatment – As highlighted, health benefits connected to diagnosis or ongoing medical treatment fall outside the screening exemption. However, other exemptions may apply in limited circumstances, which may require further investigation.

Multiple employers – If an employee works for more than one company at the same time, for example, a director within a group, the limit applies across the group as a whole, not each company within it.

Need tax advice on employee benefits?

From an employer’s perspective, health screenings can be a great benefit as they can improve employee wellbeing, reduce long-term sickness absence, support the detection of health issues sooner and improve their employer brand for recruitment and retention.

From a tax perspective, they also deliver genuine value without increasing taxes related to a person’s employment, provided certain conditions are met.

If you would like advice on implementing health screenings, reviewing existing benefits, or understanding wider tax‑efficient remuneration strategies, our team would be happy to help.

Please follow and like us: