A new temporary exemption is being introduced to make sure that employees who are given a relevant coronavirus antigen test by their employer, will not be liable to an Income Tax benefit in kind (BiKs) charge.
The exemption applies to any relevant coronavirus antigen test provided by an employer, on or after 8 December 2020, until and including, 5 April 2021.
And, For any relevant tests which have been provided earlier in the tax, HMRC will exercise its collection and management discretion and refrain from collecting any Income Tax or Class 1A National Insurance contributions due on the provision of a test. So no liability is due for the 2020/2021 tax year.
The provision of a coronavirus antigen test did not fit into any exemptions for employer provided health screening, medical check-ups (section 320B of the Act) or medical treatment (section 320C of the Act). As testing would in most instances be expected to be repeating and the benefit cost would exceed £50, the exemption for trivial benefits (section 323A of the Act) would also not have applied.
To minimise the financial and reporting burdens, a new Income Tax exemption will be introduced under section 210 of the Act (power to exempt minor benefits) to make sure that relevant coronavirus antigen tests provided by the employer are exempt from Income Tax.
To be eligible for the exemption, a relevant coronavirus antigen test is defined as a test which can detect the presence of a viral antigen or viral ribonucleic acid specific to severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2).
As required by s210(2) of the Act, the exemption provided for in this instrument will be conditional on the benefit of any provision in respect of relevant coronavirus antigen tests being made available to all of an employer’s employees generally on similar terms.
The National Insurance contributions treatment of employer provided antigen tests will follow the tax treatment, so once this tax exemption is in force there will be no Class 1A National Insurance contributions liability.
The exemption will specifically apply to relevant coronavirus antigen tests only, and does not extend to coronavirus antibody tests. This is because antibody tests do not work for everyone, as some people who have had the virus do not have antibodies. Furthermore, antibody tests only give a historic view of whether an individual has previously contracted the coronavirus, and unlike the antigen test, it does not inform whether the individual is currently affected by the coronavirus and needs to self-isolate to prevent spreading the virus to other people.