Coronavirus: Workers offered regular COVID-19 tests will not face increased tax bill, Treasury confirms

The Treasury confirms to Sky News it will introduce a new income tax exemption for COVID-19 tests provided by employers.

Coronavirus: Workers offered regular COVID-19 tests will not face increased tax bill, Treasury confirms 1
HMRC said tests purchased by employers for their staff are treated as a taxable benefit in kind

Workers offered regular coronavirus tests by their employers will not face an increased tax bill, the Treasury has confirmed.

The move comes after former cabinet minister Mel Stride, now the chair of the House of Commons Treasury committee, wrote to Chancellor Rishi Sunak to urge him to look into the matter.

Mr Stride noted how HMRC guidance published earlier this week stated that COVID-19 testing kits – or tests carried out by a third party – which have been purchased by employers for their staff are treated as a taxable benefit in kind for the employee.

Chancellor Rishi Sunak
Image:Chancellor Rishi Sunak has been urged to ‘look into this matter as soon as possible’

The Tory MP warned many key workers could be faced with the “perverse incentive of avoiding employer-sponsored tests in order to reduce their tax bill”.

The Treasury has now confirmed to Sky News that it will introduce an income tax exemption for the tests.

“Given the importance of widespread testing, we want to ensure that all employers who wish to provide third party testing to their employees can do so without increasing their tax liability,” a spokesperson said.

“So we will introduce a new income tax exemption for COVID-19 antigen tests provided by employers.

“HMRC will amend their guidance as soon as possible to reflect this change.”

Benefits in kind are benefits that employees receive from their employers that are not included in their salary.

A cash value is assigned to taxable benefits in kind, and employees pay income tax on this amount through Pay As You Earn (PAYE).

In his letter to the chancellor, Mr Stride wrote: “Given that many employers will require these tests on a regular basis, especially in health care settings but also in many other industries (such as hospitality), the tax bills could soon mount up and this does not seem to be a helpful policy at this time.”

Mr Stride also warned Mr Sunak that the policy “risks deterring workers from taking employer-sponsored tests”.

“Many of those affected will be in front line jobs in hospitals and other similar settings, and it seems wrong that a disproportionate tax burden should fall on them at this time,” he added.

Mr Stride, who worked in the Treasury under former prime ministers David Cameron and Theresa May, urged the chancellor to “look into this matter as soon as possible”.

Anyone in England and Wales who has symptoms of coronavirus, whatever their age, can get a free test through the NHS.

In Scotland and Northern Ireland, you can only get a test for your child if they are aged five or over.

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