Health and safety features – restriction of tax exemption as of 2022
By offering health and safety features, employers can implement their organisation’s health & safety policy. Through a regulation of 28 December 2021 issued by the Finance Secretary of State, the specific exemption for such occupational health and safety provisions will be restricted with immediate effect. Only provisions that are directly related to the obligations of the employer under the Working Conditions Act still fall under the specific exemption.
Background and situation through December 31, 2021
The Work Expenses Regulation includes a specific exemption for health and safety provisions that are fully or partially used or consumed at a workplace. This health & safety (Arbo) exemption is related to the employer’s obligations under the Working Conditions Act (the Arbowet). The specific frameworks of this exemption will be specified by ministerial regulation. Until 31 December 2021, its interpretation was that it concerns Occupational Health and Safety (OHS, Arbo) provisions that resulted from the employer’s OHS policy that were not charged to the employee. This interpretation offered the option of using a more creative and broader interpretation of the health and safety policy to grant allowances and benefits in kind as a specific exemption for health and safety features.
Restricted application as of January 1, 2022
As of 1 January 2022, the situation is different. The broader framework outlined would have led to ambiguity. The Finance Secretary indicates that from now on, only facilities that are directly related to the employer’s obligations under the Working Conditions Act fall under the specific exemption. The Finance Secretary indicates that the Occupational Health and Safety exemption will no longer apply to facilities designed to promote the general health of the employee. As a result, the following facilities, for example, are not (or no longer) covered by the Occupational Health and Safety exemption:
- Generally reimbursing or providing general health checks;
- Providing healthy meals; or
- Providing a bicycle
Also note that old positions have been substantially changed. For example, a chair massage or a smoking cessation course previously fell under the specific exemption, but as of 1 January 2022, this is generally no longer the case. If an employer offers this at the workplace, a nil valuation may still apply.
So which features does the Finance Secretary believe are covered by the specific exemption? This would include items such as:
- An ergonomically sound desk for the home office;
- Footstool for screen work; and
- Laboratory coats and safety shoes.
Another concern is whether a contribution is charged to the employee. If an employee contribution is charged, the Occupational Health and Safety exemption does not apply. The Secretary first confirms that the employer actually is permitted to request a contribution from the employee for the additional costs of a more expensive or luxurious version of the feature; for example, an office chair with leather upholstery. The Secretary explicitly states that the exchange of wage components, whether or not via an optional budget or menu budget, is also seen as an employee contribution in this context. This also applies, for example, to surrendering leave hours. However, the Secretary does not mention the modern wellbeing budgets that many employers currently apply.
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