Salons warned to prepare for scrapping of sickness tax relief

Salons are being warned that from next month [April] the government will be scrapping a tax relief which up to now has benefited small businesses that have employees who are off sick.

The decision to scrap the Statutory Sick Pay Percentage Threshold scheme was originally announced in the Budget last year but comes into effect from April 6.

The original scheme compensated employers experiencing higher-than-average sickness absence by allowing them to recover some of the statutory sick pay (SSP) paid to their employees, as long as the total SSP paid in a tax month was greater than a set percentage of their gross Class 1 NICs (employers’ and employees’) liability for that month.

The government has said it will use the money saved from scrapping the scheme to fund a new Health and Work Service designed to help employers, particularly small businesses, get ill employees back to work more quickly.

Although the scheme is being wound up, the government has emphasised there will be a transitionary period until April 2016 in which employers will still be allowed to recover SSP paid for sickness absences that occurred before April 2014.

NHBF chief executive Hilary Hall said: “This change may originally have been announced last year, but our feedback is that a lot of salons and small businesses remain unaware of it. The transition period will certainly help but employers need to be recognising now that this is happening and adjusting how they operate accordingly.

On the plus side, while the loss of this relief may affect some businesses in the short term, if the new Health and Work Service is successful in reducing absence and getting valued staff back to work more quickly, that can only be a good thing,” she added.

Salons are being advised to be aware that, while the associated SSP record-keeping requirements will also be abolished from April 2014, they will still be required to maintain such records for PAYE purposes and to demonstrate they are meeting their SSP obligations.

The Health and Work Service is expected to begin in pilot form this autumn and be up and running nationally by April 2015.

It will help employees who have been off sick for four weeks or more by offering them access to a specialist work-focused health assessment. This will set out a timetable for a return to work and what adjustments, if any, the business will need to make.

Both GPs and employers will be able to refer employees into the service, which will run alongside an online and telephone advice service.

More details on the new Health and Work Service can be found at: https://www.gov.uk/government/policies/helping-people-to-find-and-stay-in-work/supporting-pages/co-ordinating-the-health-work-and-wellbeing-initiative