Is the cost of a medical procedure a taxable benefit?

Injury costing ability to work

An employee working for a company suffers from a severe back problem making working impossible. Private surgery to correct the problem would cost of £8,000. HMRC has told him that because it’s a personal expense he isn’t entitled to tax relief. Tax deductions aren’t allowed for expenses which have a dual purpose, i.e. a business and a personal one. The rules require expenses to be “wholly and exclusively” for the purpose of the business to qualify for tax relief.

Particular jobs

The courts also accept that the duality rules don’t apply where an expense is intended for business purposes only, but has an incidental personal advantage. Because of this HMRC occasionally accepts that the cost of medical treatment is tax deductible. Typically these cases involve performers, such as dancers or footballers, where they might be able to carry on a normal personal life without the medical treatment but they need it if they are to continue in their profession.

Employer pays for treatment

Tax relief on the cost of medical treatment for employees or directors is allowed for an employer. This will usually count as a taxable benefit in kind for the employee or director concerned. In certain situations legislation exempts benefit in kind taxes from employers paying for medical treatment and an example of this is where an employee falls ill whilst working abroad. This is extended where employers pay for medical treatment for an employee or director if the need for the treatment results from injury or illness caused by or as a consequence of doing their job.

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