Flu Jabs and PAYE/NIC implications
We are fast approaching the time of year when many people across the country will be receiving seasonal ‘flu vaccinations’. For some these will be offered free by the NHS through local GP practices. However, in many instances it will be necessary for these to be provided through other means involving a charge.
Many public bodies will wish for, or require, their staff to be vaccinated this autumn/winter and will be meeting the cost either through direct purchase or providing vouchers to use at a pharmacy. However, we are aware that last winter there was a shortage of availability of the vaccines meaning employees were encouraged to source their own vaccinations with the employer then reimbursing the cost.
Care should be taken regarding the tax/NIC position regarding the meeting of such costs – yes, even flu jabs have tax implications! – as there will be different consequences depending on the appropriate method used. HMRC accepts that directly purchasing the vaccinations or providing a voucher would qualify for exemption from any tax/NIC charge under the trivial benefit rules. This is subject to the proviso that the cost does not exceed £50 per person and it is not provided under any salary sacrifice arrangement.
However, where an employee arranges to receive the vaccination and is reimbursed the cost by their employer then HMRC has confirmed that this would not qualify as a trivial benefit, because it represents a ‘cash’ payment. Where this occurs, the amount reimbursed should be paid through the payroll and be subject to PAYE/NIC. This would mean, of course, that your employees would be out of pocket as a result of being reimbursed the cost of the vaccination. A better alternative would therefore be for a PAYE Settlement Agreement (PSA) to be set up under which the tax/NIC costs can be met directly. As we confirmed at this time last year, HMRC will accept the tax/NIC charge being met via a PSA for 2021/22. However, please note that the PSA should be registered with HMRC before any reimbursement takes place.
It should be noted that the exemption under the trivial benefits rules won’t apply to other vaccinations that are not seasonal, eg Hepatitis B or TB. Therefore, if your organisation is meeting the cost of other vaccinations, please do speak to us regarding the implications.
If you have any concerns about your arrangements and the relevant tax position, or need help with registering a PSA, please do get in touch with Duncan Groves Duncan.Groves@pstax.co.uk 07760 271490, John Harling John.Harling@pstax.co.uk 07768 446381 or your usual ET contact.