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Wellness allowance – good to know for employers

Why offer a wellness allowance? What are the rules and what is classed as a wellness activity? These are just a few of the questions about wellness allowance that we will answer in this article.

The advantages of offering a wellness allowance

As an employer, you are under no obligation to offer your employees any wellness benefits, it is completely voluntary. On the other hand, a wellness offering provides a number of advantages to employers and employees alike. Offering a wellness allowance or wellness activity sends a clear message that you want to make it easier for your employees to participate in health-promoting activities. Wellness offerings can contribute to:

  • Long-term healthy living
  • Improved employee attendance
  • The prevention of work-related stress injuries 
  • Greater employee satisfaction.

What are the rules for a wellness allowance?

According to the Swedish Tax Agency, a wellness allowance is a tax-free employee welfare benefit. For a benefit to qualify as a tax-free employee welfare benefit, it must be of lesser value and offered to all employees on the same terms regardless of their form of employment.

In October 2022, the Swedish Tax Agency announced that employers can choose to offer all employees the same wellness allowance regardless of their working hours and form of employment, but they can also choose to prorate it.

An employer thus has the opportunity to proportion the health care allowance in relation to working hours and degree of employment. For example, if the permanent employees receive a wellness allowance of 3000 SEK, the employer can give those who only work six months 1500 SEK in wellness allowance. Correspondingly, the employer can also give those who work part-time throughout the year a wellness allowance that is proportional to the employee’s working hours. Even for hourly employees and project employees, the allowance can be prorated according to estimated working hours. When calculating working time, all working time should be included, including home office, for example. In the case of employees who are on sick leave or parental leave, they still belong to the staff and in this context should be assessed based on their regular working hours in terms of the right to wellness allowance.

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Management of wellness at the turn of the year 2023/2024

There are some rules that you need to take into account considering wellness allowance in connection with the turn of the year 2023/2024.

  • Only costs incurred during the employment period can be reimbursed tax-free.
  • The employee can only claim a receipt for exercise or health care once, and this is during the tax year in which it is paid. Exceptions can be made at the turn of the year to take the employer’s salary routines into account when their salaries are often closed at the beginning of December. Then the employee’s payments in November and December of year 1 can be replaced by the employer with a health care contribution in year 2. That contribution must then also be included in the basis for the 5000 SEK limit for year 2 (if the compensation exceeds the limit, the entire sum becomes taxable instead) or the employer’s own maximum amount.
  • A wellness contribution paid by the employee in 2023 and paid to the employee in January 2024 cannot be credited to the tax-free contribution for the year 2023.
  • A wellness allowance that has not been used in the same year cannot be carried over to the following year.

Wellness allowance amount

As mentioned above, the wellness activity must be of lesser value to be tax-free, which in practicality means that the wellness allowance must not exceed SEK 5,000. Any amount above this is taxed. The activity must also be of a simpler kind and not require advanced equipment or expensive facilities.

For activities without any form of exercise, for example, massage, the maximum cost for the activity is SEK 1,000 per occasion to be considered of lesser value and tax-free. 

The tax exemption only applies to the cost of the activity itself, meaning that the purchase or rental of equipment or accessories for wellness activities is not considered a tax-free benefit. However, it does not include the rental of equipment that’s required and is included in the price of the activity, for example, the rental of a bowling ball and shoes.   

What is classed as wellness?

The wellness allowance covers the most common physical exercise and wellness activities. It can be used for simple activities with elements of exercise or treatments for relaxation or to relieve muscle stiffness. It’s also possible to use it for dietary counseling or courses on how to quit smoking. 

Previously, the Swedish Tax Agency had a list of the most common wellness activities included in the wellness allowance. The extensive list has been removed since it could be interpreted that activities not mentioned on the list weren’t included in the allowance.  

The employer’s approach is key

As well as being voluntary for the employer to offer a wellness allowance, it is also completely voluntary for the employee to take up the offer. Achieving change and a healthier lifestyle requires more from the employer than simply offering a financial incentive. Management’s approach is key to whether employees take up the offer. Managers must be part of the wellness initiative by demonstrating and talking about its importance.

Reaching those who find it difficult to get started may require additional support and encouragement in the form of joint activities or by establishing workplace ambassadors to inspire colleagues. Naturally, the greatest benefit is gained by getting employees who do not participate in any form of wellness activity to become physically active and improve their health. Focusing on those who are already keen fitness enthusiasts offers less return on your wellness initiative.

Many ways to motivate

A wellness initiative such as a wellness allowance is just one way to encourage employees to improve and maintain their health. There are, of course, other ways to encourage healthier living. Activities such as seminars on physical exercise, courses on how to quit smoking, health check-ups and so on can also inspire your employees.

Advice within wellness

Azets’s experts have extensive experience in payroll and accounting services and advising companies. Within wellness, we can provide support in both the establishment of new wellness benefits and changes to existing offerings, the preparation of policies, the administrative aspects and more. Please don’t hesitate to contact us for more information about how we can help your company.