Tax breaks for employee protection 'a no-brainer' says MP
Tax breaks that incentivise employers to look after the health of their staff and protect their income are ’a no-brainer’, Heather Wheeler MP told a round table briefing at the House of Commons on Tuesday.
Speaking at an event sponsored by Unum and the Institute for Social and Economic Research, Wheeler said she supported the idea of tax breaks, but was less keen on the notion of reducing the disincentive to protect one’s own or one’s employees’ income created by means-tested benefits.
Jack McGarry, chief executive of Unum UK said means-testing made group income protection a tough sell, and suggested the government should disregard at least some of the income secured by those who took the trouble to protect their income to make the situation less unpalatable to employers considering the product.
Dame Carol Black said the review she co-authored with David Frost CBE called for very limited tax breaks, for basic rate taxpayers and limited to spending on occupational health, because the Treasury was almost certain to reject anything more substantial. But she added that of all the review’s proposals, tax changes were arguably the least likely to be taken up.
Wheeler said: “We will ponder what is the downside for pushing the Treasury for tax incentives on this, because as far as I am concerned it is a no brainer.
“But I do not see the government having any incentive to say you are going to get the disability allowance and the insurance payment on top. I prefer the idea whereby the state says ’We’re not going to let you keep your benefit, but we are prepared to spend a lesser sum of money in tax relief so that you provide for yourself so we do not have to pay it.’”
Dame Carol Black said: “We didn’t ever tried to push the group income protection. And the senior civil servants who lead the review, Donna Ward, had worked in the Treasury. She felt we should work towards matching what the employers told us would make a difference. We saw it has targeted at a limited group of people to help them get back to work .
“We decided to see where we could make the case for tax changes based on what employers are saying they would take up. We are talking about the situation where employers were saying, and hopefully we can believe them, ’we have a valuable worker and we like to get him a scan or some physio, and we would do this if we did not have to pay a benefit in kind.
“You could say that of all of our recommendations it is the one that might run into the buffers first.”
Andrew Selous MP, parliamentary private secretary to DWP secretary of state Iain Duncan Smith, said: “As a government we are very much in listening mode and we want to get this right.”