Employee wellbeing has taxable benefits
Employee wellbeing UK tax benefits
Providing employee wellbeing sessions for your staff, such as mindfulness, stress management and anxiety training, is considered an allowable tax deduction for your UK company.
This is good news. Happy dance!
Please note this article has been updated for 2026.
Are employee wellbeing benefits taxable in the UK?
In short: some are, and some aren’t.
It depends on how the benefit is structured and whether it qualifies as a benefit in kind (BIK).
A benefit in kind is anything provided to an employee that isn’t salary but has a monetary value. Many wellbeing perks fall into this category, meaning they may be taxable unless specific exemptions apply.
What’s the tax exemption?
The main exemption relevant to employee wellbeing is the welfare counselling exemption for employers.
This is set out in:
- Section 210 of the Income Tax (Earnings and Pensions) Act (ITEPA) 2003
- The Income Tax (Benefits in Kind) (Exemption for Welfare Counselling) Regulations 2000.
You can view the official HMRC guidance here on Gov.UK website. CLICK HERE
As a UK employer, you can benefit from this welfare counselling tax exemption when you plan and deliver your wellbeing strategy.
What does employee wellbeing UK tax benefits mean in practice?
Under this exemption, employer-provided counselling services can be tax-free for employees but only if they meet specific criteria.
The exemption is quite narrowly defined and not all wellbeing support qualifies.
✔ Typically covered (tax-free)
Welfare counselling related to:
- Stress and mental health
- Problems at work
- Bereavement
- Relationship difficulties
- Harassment or bullying
- Alcohol or drug dependency
- Career concerns
These are the types of support commonly delivered through external wellbeing training and some Employee Assistance Programs (EAPs).
✖ What’s not covered
The exemption does not apply to:
- Financial advice (except debt counselling)
- Tax advice
- Legal advice
- Leisure or recreational advice
If these are included, the exemption may no longer apply to the whole program.
Always check with your internal tax advisor or finance team.
Important update (still relevant in 2026)
Since April 2020, the rules were expanded to include some medical treatments delivered as part of counselling, such as:
- Cognitive Behavioural Therapy (CBT)
- Interpersonal therapy
This means these can now be included without creating a taxable benefit, when provided as part of a qualifying counselling service.
A key point employers often miss
The exemption is “all or nothing.”
If a wellbeing or EAP service includes elements outside the exemption, the entire benefit may become taxable.
That’s why it’s important to:
- Check exactly what’s included in your wellbeing offering
- Ensure services are structured correctly
- Keep exempt and non-exempt services clearly separated where needed.
Which employee wellbeing UK benefits are tax-free?
There are several wellbeing-related benefits that can be provided without creating a tax charge, as long as they meet certain criteria.
Common examples include:
Workplace counselling / Employee Assistance Programs (EAPs)
Support for mental health, stress, or personal issues is typically exempt when structured correctly.
Annual health checks or medical screenings
Employers can usually provide one health screening per year tax-free.
Work-related training
This includes stress management, resilience, or mental health awareness training where it supports the employee in their role.
Reasonable workplace adjustments
Support for employees with specific health needs can often be provided without tax implications.
Which wellbeing benefits are taxable?
Some of the most popular wellbeing perks are actually taxable benefits, which can catch employers off guard.
These often include:
✖ Gym memberships or fitness subsidies
Even if positioned as wellbeing support, these are usually treated as a benefit in kind.
✖ Private medical insurance
This is a well-known taxable benefit.
✖ Cash allowances or wellbeing budgets
If employees can choose how to spend the money, it’s typically taxable.
✖ Lifestyle perks (e.g. spa days, some wellness apps)
Depending on how they are structured, these may also be taxable.
What’s changed (and what to watch) in 2026
One ongoing shift employers should be aware of is the move towards payrolling benefits.
This means:
- Employees are taxed on benefits in real time through payroll
- Less reliance on end-of-year P11D forms
- Greater visibility of the true cost of benefits
For wellbeing strategies, this makes it even more important to:
- Understand what’s taxable
- Be intentional about what you offer
- Communicate clearly with employees
What this means for employers in practice
Many UK employers want to support or improve employee wellbeing, but:
- They’re unsure what’s allowed
- They worry about unexpected tax costs
- Or they default to perks that sound good but don’t deliver real impact
Consider focusing less on perks and more on meaningful wellbeing support for your staff.
For example:
- A gym discount (taxable) vs a stress management training workshop (often tax-efficient and more impactful)
- A wellbeing allowance vs structured support that actually reduces burnout
The most effective wellbeing strategies are:
- Practical
- Relevant to real-life workplace situations
- Designed to create lasting behaviour change
FAQs: Employee wellbeing and tax
In many cases, yes, especially if they are directly related to supporting employees in their role. However, whether they are taxable for the employee is a separate question.
Usually no. EAPs that provide counselling and support are generally exempt from tax when structured correctly.
Often yes, as a business expense, however, this doesn’t automatically mean the benefit is tax-free for employees.
Typically not, if they are work-related and aimed at improving employee wellbeing and performance.