As an employer, you want to look after your team’s health and wellbeing. Offering to cover the cost of routine healthcare like eye tests and seasonal flu vaccinations is a brilliant way to show you care. But historically, the tax rules made this generous gesture surprisingly complicated to process.
The problem with the old rules
Before this year, if an employee paid for their own flu jab or eye test and you reimbursed them, it created an administrative headache. That direct reimbursement was generally treated as taxable earnings. It meant you had to calculate Class 1 National Insurance contributions and operate PAYE on the amount.
To avoid this tax charge, businesses had to use rigid voucher schemes or arrange and pay for the medical services directly. It was a frustrating hurdle that often discouraged employers from offering the benefit at all.
The April 2026 exemption
Fortunately, the legislation has finally caught up with modern workplace practices. From 6 April 2026, the government introduced a new tax exemption specifically for these health benefits. You can now reimburse your staff directly for eye tests and flu vaccinations without triggering any Income Tax or National Insurance charges.
This straightforward change removes the need for third-party vouchers entirely. Your employees can simply book their own appointments, hand you the receipt, and you can pay them back tax-free. It makes looking after your team much easier to manage.
Action points
- Update your internal expenses policy to reflect the new 6 April 2026 tax exemptions for health benefits.
Tell your team about the simplified process so they feel comfortable claiming for their eye tests and flu vaccinations.
Remember that any reimbursements made before 6 April 2026 must still be treated under the old, taxable rules.
Let’s have a chat about how we can transform your payroll.
