Help for employers

What does the law say on employing disabled staff?

Under the Equality Act 2010 no employer may treat less favourably a disabled person in terms of recruiting, training, promotion, dismissal or redundancy than any other person.

This may mean that in order to take on a disabled employee, or retain one who has become disabled whilst in work, you need to make reasonable adjustments to enable a disabled person to carry out a particular job, so that they are not disadvantaged.

In determining whether it is reasonable for an employer to take a particular step in order to meet the requirements of the Act, particular regard will be given to the extent to which it is practicable for the employer to take the steps, the extent of the employer's financial and other resources and so on.

A 'disabled person' is legally defined as someone with 'a physical or mental impairment that has a substantial and long-term adverse effect on his/her ability to carry out normal day-to-day activities'.

You can find guidance on the definition of disability under the Equality Act on GOV.UK.

Some examples of reasonable adjustments are:

• Altering the person's working hours
• Allowing absences during working hours for medical treatment
• Giving additional training
• Getting special equipment or modifying existing equipment
• Changing instructions or reference manuals

Most adjustments are simple and low or no cost – such as raising or lowering pieces of furniture or allowing someone to use a car parking space. Not every disabled person needs sophisticated equipment or support, and if they do, the Access to Work scheme can help to fund this.

The Equality and Human Rights Commission has provided examples of reasonable adjustments in practice.

What is Access to Work?

Access to Work is a specialist, government-financed disability programme. It covers England, Scotland and Wales and can give grants towards extra employment costs. A different system is run in Northern Ireland.

Access to Work can help fund things like the cost of specialist equipment and alterations to premises or a working environment to make it more accessible.

Although payments are often made to employers to help pay for support provided to the disabled employee, it is the employee who has to apply for the grant. You can therefore read about the scheme in more detail on our help for employees and the self-employed page.

You can also find an Employer’s Guide to Access to Work Factsheet on GOV.UK.

Please note that the Equality Act 2010 places a duty on an employer to make reasonable adjustments for disabled employees. Access to Work funding cannot be used to support these adjustments.

Access to Work will also not fund items which are regarded as standard equipment, standard business costs or standard health and safety requirements. This means that any item which would normally be needed to do the job, whether a person is disabled or not, will not be paid for.

How does the tax system support employers of disabled people?

The Equality Act (EA) 2010 requires employers to make reasonable adjustments to help any disabled employees and these can cover both changes to the workplace or employment arrangements.

The cost of making many of these adjustments would qualify for tax relief as a business expense either as a revenue expense, or through capital allowances.

Examples of revenue expenses include the cost of large print documents and training on disability issues. These are fully deductible for tax purposes. Examples of capital expenses include installation of ramps and hand-rails. HM Revenue & Customs (HMRC) give guidance on capital allowances and examples of the tax treatment of particular types of expenditure on GOV.UK.

This guidance is equally relevant to the reasonable adjustments you would need to make under the EA 2010 where your business provides goods, services and facilities direct to disabled customers.

Please note that while VAT zero-rating is available for modifications to certain areas of the home for disabled people, no corresponding relief is available in UK VAT law in respect of workplace modifications undertaken by an employer. Although this may not be an issue for employers who are able to recover input tax in full, VAT costs could be incurred by those unable to, for example exempt or partly exempt employers such as banks and other financial institutions

You may be interested to read our 2017 submission to the government’s work, health and disability green paper in which we called for changes to these rules.

Are there any other tax reliefs?

If you provide equipment or services (for example, a hearing aid or wheelchair) to a disabled employee, with the main purpose of enabling them to perform their duties of employment, you will have no reporting requirements and no tax or National Insurance contributions (NIC) to pay under benefit-in-kind rules, even if they use it privately (whereas if the employee did not have a disability this would not usually be the case). The rules ensure that no tax charge arises on this benefit when provided to an employee with a disability, even if the employee uses the equipment both in work and outside work, and private use is significant.

You can find out more on GOV.UK.

An employer of a disabled person is also able to provide a car (including the provision of fuel and other related expenses) to an employee with a disability with no reporting requirements and no tax or NIC provided certain conditions are met. You can also meet certain costs free of tax to the employee such as for travel from home to work, which would normally be classed as a benefit-in-kind and taxed as such.

Details of these and the other minor adjustments to the tax law to take into account the needs of people with disabilities are given on the help for employees and the self-employed page.

As an employer, do I need to be involved in tax credits or universal credit for disabled employees?

As an employer, you may wonder why you need to worry about tax credits or universal credit (UC).

As explained on the help for employees and the self-employed page of our disabled people and carers guide, tax credits are made up of working tax credit (WTC) and child tax credit (CTC). WTC is paid to workers whether or not they have children and CTC is payable to people who are responsible for a child whether they are in work or not.

It is important that you understand tax credits, as an employee’s entitlement can depend on the number of hours they work. The criteria are explained further in the working tax credit section of our website.

As you can see, if your employee qualifies for the disability element of working tax credit they can qualify by working at least 16 hours instead of the usual 30. A disabled employee working 15 hours per week cannot claim tax credits, whereas by working 16 hours they may qualify.

Similarly, once they qualify by meeting this basic criteria, they can get extra tax credits (called the 30 hour element) if they work at least 30 hours per week.

The tax credits system is gradually being replaced by UC. UC is now available in all parts of the UK, which means that most people can no longer make brand new claims for tax credits. Broadly, existing tax credit claimants will be transferred across to UC in a managed exercise which is currently planned to take place by September 2024, following a pilot to test the processes. However, the pilot has been suspended due to the coronavirus pandemic. Apart from migration exercise, existing tax credit claimants will not be affected by UC unless they have a change of circumstances that means they need to claim UC earlier, they need to claim another benefit that UC has replaced or they choose to claim UC.

Unlike WTC, for UC, employees do not need to work a minimum number of hours to qualify but they will have a claimant commitment that may require them to seek more work in order to reach a certain earnings threshold. This is called conditionality.

Therefore, tax credits and UC can be very important for low income workers, particularly those with disabilities. As well as meaning employees can receive additional money, tax credits and UC can help employees with disabilities to remain in work when they may otherwise have been forced to leave.

Will I have to be involved if my employee is claiming tax credits?

Yes, potentially.

Your employee will have to provide details about their work to HMRC.

At any time when tax credits are in payment, HMRC may check your employees tax credits award. They may ask for things like a P60, P45, P11D.

In addition, HMRC can ask employers to provide evidence in relation to a tax credit claim. If this happens, HMRC will write to you stating what documents they need to see in relation to the employees claim.

HMRC now use information sent to them by employers through the Real Time Information (RTI) system to help finalise tax credit claims. It means that the information you send to HMRC through RTI will directly affect your employee’s tax credits claim. If any information is wrong, their tax credits claim may be wrong.

Will I have to be involved if my employee is claiming UC?

Yes, potentially.

The key features of UC are:

• Unlike working tax credit, there are no minimum hours requirements to claim UC.
• Monthly payments are usually automatically calculated based on RTI information provided to HMRC by employers.
• Payments are usually adjusted automatically based on the amount reported under RTI: if earnings increase in one month then UC payments decrease and vice versa.

In short, the implications for employers are:

• Employers do not need to know if their employees are claiming UC and often do not need to do anything differently.
• UC claimants are treated the same way as other employees for payroll purposes: there are no special tax codes or extra reporting requirements.
• Employers don’t need to report earnings separately: PAYE information sent to HMRC is automatically forwarded to the Department for Work and Pensions (DWP).
• There is no need to notify HMRC if an employee or prospective employee claims UC: when a claimant is accepted as eligible, DWP send an electronic message to HMRC who update their records accordingly.

There are, however, some areas which employers do need to be aware of:

• As there are no working hours thresholds in UC, employees may look to increase their hours, or be more open to taking on ad hoc overtime.
• Employers that are exempt from online payroll reporting need to inform their employees of this, as the employees will be personally responsible for reporting their earnings to the DWP.
• As RTI data is used to calculate UC each month, it is important that the RTI reports made by employers are accurate. It is also important that they are on time (usually on or before the employee’s pay day but HMRC have specific guidance in place where an employee is paid early or late, for example due to Christmas or their usual pay day falling on a non-banking day).

Inaccurate or late RTI reports can lead to uneven UC awards or, if a late submission results in two payments apparently being made in the same month, the DWP may think that the employee’s income has gone up, with the result that the employee’s UC claim could be significantly reduced for that month or even stopped altogether.

The DWP’s Understanding Universal Credit website provides information to help people navigate UC, including employers.

My business is struggling and I need to make changes to either hours or pay. Will this affect my employee’s tax credits or UC?

Any changes to hours or pay can impact on tax credits or UC. It is therefore important to tell your employees to seek advice from a local advice agency such as the Citizens Advice Bureau as to how any potential change may impact on their tax credits or UC.

Where can I get more information and support about employing a disabled person?

GOV.UK contains guidance that will help employers to become more confident when attracting, recruiting and retaining disabled people.

There is a collection of resources about employing disabled people including the government publication on employing disabled people and people with health conditions and information how the Disability Confident employer scheme can help your business.

GOV.UK also has details of how you can be awarded the disability confident symbol (this has replaced 'two ticks') – the scheme which shows you encourage applications from disabled people.

The Department for Work and Pensions' Jobcentre Plus provides information and advice to employers to support them in adopting good employment policies and practices in the recruitment, retention, training and career development of disabled people.