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Employers – Eye tests and the provision of glasses

Posted by: edwinsmith on January 24th, 2014

Where an employee is required to use display screen equipment (usually a computer with a Visual Display Unit -VDU) as part of his normal duties for an employer then there are tax reliefs available to the employer and employee concerning the employer payments for eye tests and the provision of glasses.

If an employee is required to use a VDU in the above circumstances then no taxable benefit will arise on the cost of

  1.    an eyesight test, and

 2.    glasses or contact lenses required solely for VDU use that the eye test shows is necessary where

the test is required under Health and Safety at work regulations and if shown to be necessary by the test.

A special prescription should be obtained for VDU use in order to take advantage of tax relief.

 Where glasses etc are for general use, but include a special prescription for VDU use, a proportion of the cost relating to the special prescription will be exempt from a taxable benefit.

The provision or payment by an employer towards the cost of glasses etc for general use, including use with a VDU, but without a special prescription for VDU will give rise to a taxable benefit.

For Class 1 National Insurance Contributions (NIC) there are similar exemptions from liability if a special prescription for VDU use is obtained in above circumstances regardless of whether employer contracts with optician or employee arranges test etc and employer reimburses them.

However if the eye test identifies a general need for glasses (as well as special prescription for VDU use) and the employer  reimburses employee for whole costs then liability for Class 1 NICs will arise on the amount exceeding VDU related prescription. This amount will effectively be treated as part of employee’s salary and PAYE/NIC calculated on this amount in normal way for salary etc.

If the employer contracts with the optician then amount paid by employer will be disregarded for Class 1 NICs but the amount exceeding VDU related prescription will need to be treated as benefit in kind to employee and entered on the relevant year end P11d forms (Employers return of benefits and expenses paid to employees). Therefore in this situation Class 1a NIC would be payable by the employer but employee would not suffer Class 1 NIC liability.

Please contact us if you would like further advice in this area.