17 July 2024
In some job roles it is important to ensure that employees are taking care of their vision and can perform their duties effectively. This can mean providing or arranging eye tests through a variety of different methods.
Our advisory service gets questions about this area on a regular basis, so here are some high-level tips to help you understand what you need to do in some frequently queried situations.
Paye As You Earn (PAYE) Income Tax exemption
The first thing to make clear is the tax exemption only applies to the provision of an eye test and ‘special corrective appliances’; the exemption does not apply for reimbursement.
A voucher for an eye test is provided to an employee
Where a voucher is given to a qualifying employee no reporting of such provision is required, if only one voucher is given within a 12-month period.
The eye test is arranged and paid for by the employer
As above, one eye-test per 12-month period can be paid for on behalf of qualifying employees.
An employee arranges for their own test and is reimbursed for the cost
In this situation any reimbursed funds are to be considered as earnings and PAYE tax and National Insurance should be deducted at source.
Can you pay towards corrective equipment (glasses or contact lenses) that the employee requires?
Commonly known as the HMRC glasses allowance, the same exemptions for the provision of tests, as above, apply to corrective equipment where they are solely for visual display unit (VDU) use as deemed necessary by the eye test. Should corrective equipment be needed on a general use basis but include a special prescription for VDU use, the proportion of the cost relating to the VDU specific prescription will be exempt from being a chargeable benefit.
Where corrective equipment is required solely for VDU use the National Insurance regulations allow that a reimbursement can be exempt from Class 1 and Class 1A contributions. This does not change the tax position regarding reimbursements.
Where general use and VDU use are prescribed, without a separate VDU use prescription, a chargeable benefit will be created.
Additionally, where an employee is reimbursed, this will also need to be paid as earnings as a taxable benefit will arise.
Who is a qualifying employee?
If an employee uses VDU equipment as part of their normal duties and:
- the test is required under Health and Safety at Work regulations and,
- they are available generally to all employees (in the case of corrective appliances (e.g. glasses and contact lenses), only if shown to be necessary by the test).
Please note that mobile devices and screens within vehicles do not meet the criteria for VDU exemptions and therefore taxable benefits may arise from the provision or reimbursement of eye tests and equipment.
Key links and resources for employee eye tests:
Income Tax (Earnings and Pensions) Act 2003 (legislation.gov.uk)
The Social Security (Contributions) Regulations 2001 (legislation.gov.uk) (Schedule 3, Section VIII, Para 9.)
Expenses and benefits: personal bills: What to report and pay - GOV.UK (www.gov.uk)
Information provided in this news article may be subject to change. Please make note of the date of publication to ensure that you are viewing up to date information.