Susan Ball

Written by: Susan Ball

Susan Ball

Partner

Is the NHS facing a big tax bill for keeping us safe and well?

Back in March Sir Simon Stevens, NHS Chief Executive, wrote to all NHS trusts. He recommended that in order to keep hospitals running they needed staff so, on an entirely voluntary basis, staff should be offered the alternative option of staying in NHS-reimbursed hotel accommodation while they continued to work, particularly where they were affected by Public Heath England’s guidance around isolation.

Many NHS trusts made accommodation, food, transport and parking available to staff in order to keep them safe and well and to enable them to do their jobs. We read about front-line staff staying away from their families in order to carry on working. We spent many weeks out on our doorsteps clapping to thank the NHS. Without them where would we be?

Whilst the number of those in hospitals has now dropped allowing many to get back to their families, we could face a possible second wave in future, so we could see more of these arrangements. However, what is now evident is that many NHS staff making such a sacrifice had no idea they might end up with a tax bill for doing so. 

Free carparking at or near your normal place of work is not taxable. That’s not the issue at stake here. The problem is that, under the existing tax rules, provision of accommodation at your normal place of work, or travel from home to and from work, and indeed meals, are all taxable, unless certain limited exemptions apply. And they just don’t apply for many of the NHS workers for whom this has been paid.  

Strictly where the cost of these items is reimbursed and doesn’t meet an exemption, it should go through payroll within 14 days or the next payroll run of being reimbursed and be subject to tax and National Insurance Contributions. Where the cost is paid direct it should be reported on the form P11D at the end of the tax year and the individual member of staff would then pay the tax. 

HMRC has done the best it can with its existing powers, by relaxing the rules on PAYE settlement agreements, which means NHS employers can pick up the tax bill on behalf of their employees. That doesn’t go far enough. The government has recognised that, in these extraordinary times, some tax rules need to change. We urge the government to address the tax liabilities of NHS staff who live and work away from home in a time of crisis, so they can continue to provide us with care to keep us safe and well, without the risk of additional taxes to pay.

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