Income Tax (Earnings and Pensions) Act 2003 section 325

Overseas medical treatment

Section 325 provides an exemption from income tax on the benefit of medical treatment or medical insurance provided to an employee who falls ill or is injured while working abroad.

• No income tax arises when an employer provides medical treatment to an employee outside the UK, provided the need for treatment arises while the employee is abroad performing their duties.
• The exemption also covers insurance provided by the employer against the cost of such overseas medical treatment, but does not extend to reimbursing an employee for premiums they have paid themselves.
• Medical treatment is broadly defined to include all procedures for diagnosing or treating any physical or mental illness, infirmity or defect, and includes in-patient hospital stays necessary for such treatment.
• The exemption only applies where the medical treatment or insurance is provided directly by the employer as a benefit in kind; if the cost is handled in a way that makes it taxable as earnings, this exemption does not apply.