§ Lord Clement-Jonesasked Her Majesty's Government:
What progress has been made in addressing the problems caused to HealthSure Group Ltd and other not-for-profit health cash plan providers by the change in the tax treatment of surpluses; and whether they will ensure that a satisfactory solution is found so as not to impact adversely upon such providers or the charitable donations they make from such surpluses to the National Health Service and medical charities. [HL630]
§ The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord McIntosh of Haringey)After discussions between the Inland Revenue and representatives of health cash plan providers, it was agreed it was necessary to tailor solutions that took account of the differing circumstances of the providers. Inland Revenue staff have been working with the individual cash plan providers on an agreed timetable to ensure a smooth change to the tax treatment of surpluses.
For those health cash plan providers who opt to change their constitution to comply with the requirements for mutual trading, the Inland Revenue is allowing tax exemption to apply through the transition. For these, there is no impact on charitable donations.
For those that prefer not to change their constitution, their surpluses will, from a date to be agreed with their inspector, be chargeable to tax as trading profits. However, they can make donations to charities, which qualify for tax relief under gift aid rules, so in practice, they will see little change from the previous situation.
The impact of these changes depends largely on decisions taken by individual health cash plan providers.
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