Businesses that help employees back to work after periods of absence will be offered tax relief under proposals outlined in the budget.

The Chancellor’s announcement, which will be consulted on later this year, will ensure amounts of up to £500 paid by employers on interventions recommended by the newly-announced health and work assessment and advisory service are not treated as a taxable benefit in kind.

“Companies that look after their employees, and help them return to work after periods of sickness, will get new help through the tax system,” George Osborne announced to the Commons.

The move follows recommendations made in the review of sickness absence carried out by David Frost, former director general of the British Chambers of Commerce, and Dame Carol Black, national director for health and work. The November 2011 report recommended establishing an assessment and advisory service to support people at risk of long-term sickness absence and make interventions to ensure they do not fall out of the labour market. The measure was accepted by the Department for Work and Pensions (DWP) in January.

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