Government reverses ruling on charging tax for Covid-19 tests

Employees will pay tax on Covid-19 tests paid by their employers

The Government has reversed its ruling on classing Covid-19 (Coronavirus) testing as a benefit in kind tax.

Concerns were raised by Mel Stride, chair of the treasury committee after guidance published by HM Revenue and Customs (HMRC) on 6 July 2020 stated that Coronavirus (Covid-19) testing kits or tests carried out by a third party, will be deemed as a taxable benefit and subject to income tax charges.

This would have meant that employees who require regular testing, in industries such as healthcare and hospitality, would have to pay multiple tax charges. Since then, it has been confirmed that this is no longer the case, and since then, the information has been removed from the official guidance.

When addressed in parliament on 8 July 2020, Rishi Sunak, chancellor of the exchequer said: “I’m delighted with him for raising this with me and of course we will look into it very quickly.”

A spokesperson at HM Treasury said: “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. 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.”