HMRC advice received on treatment of NHS Highland Healing Process payments

NHS Highland welcomes the decision from HMRC that the majority of participants in the Healing Process will not have to pay tax or national insurance on payments received because most will be made due to harm suffered, not loss of earnings whilst in employment.

The Healing Process is an independent service developed by NHS Highland in partnership with whistle blowers, colleagues and other stakeholders, with Scottish Government funding, to help individuals who have suffered from historical bullying and harassment while working for the health board in Highland and Argyll & Bute.

HMRC has reviewed the unique features of the Healing Process and said that where payments are made with reference to harm and healing, these are not taxable. Only those made for loss of earnings while employed at NHS Highland are subject to tax. It is expected that the vast majority of payments will be made as a result of harm suffered and so will not be taxable.

The Healing Process’s Independent Review Panel (IRP) has confirmed that none of the payments it has recommended to date were to compensate for lost earnings whilst in employment.  This means we can treat them all as not subject to tax.  In future, the IRP will make clear in its recommendations what element, if any, of a payment is made for loss of earnings while in employment and which is therefore taxable. Refunds will be processed for anyone who has paid tax on payments that are now not deemed taxable. Non taxable payments will now be able to be processed via bank transfer, rather than payroll. 

NHS Highland apologises for confusion and hurt caused as a result of the tax implications of the Healing Process payments not being highlighted earlier, and for making payments before obtaining clarification from HMRC.

NHS Highland is pleased with the HMRC decision which will enable participants to benefit further from the Healing Process and urges individuals affected by past bullying or harassment while working for NHS Highland to register for the service by the closing date of 26 February if they have not yet done so.

Pam Dudek, NHS Highland Chief Executive, said: “We welcome the HMRC decision that the vast majority of Healing Process payments will not be subject to tax. And we sincerely apologise for upset and harm caused by the initial confusion on what the tax situation would be for this unique service. While we sought in good faith to make payments as quickly as possible once recommendations had been approved, in retrospect, delaying payment while we sought clarification from HMRC might have been advisable.  We are pleased that participants in the process now have clarity, and we would encourage others who qualify to register with the service designed to help them heal.

“We have been unequivocal in our support of those who have experienced bullying and harassment. I would like to reaffirm that we are deeply sorry for the harm that has been caused to every one of those individuals.”

Access to the IRP is just one of the options available to participants in the Healing Process, run by a professional team of independent advisers. Other support mechanisms include one-to-one discussions (held remotely), formal apologies and access to independent psychological therapies.

For further information on the decision on tax and National Insurance please visit: