ATT calls for extension to COVID testing tax break

14 October, 2021

The Association of Taxation Technicians (ATT) is calling for the Chancellor to remove the tax barriers for employer-testing not just for COVID-19, but for any other highly infectious diseases.1

If an employer bears the cost of an employee’s COVID-19 antigen test, HMRC’s view is that this results in a taxable benefit-in-kind equal to the cost of the test. To avoid tax complications for employers and their employees, the Government has provided specific measures to give relief from the usual benefit-in-kind rules when an employer pays for or reimburses an employee for a COVID-19 antigen test.2

This relief is temporary, applying only to tax years 2020-21 and 2021-22 – although the Treasury has been given the power to extend that exemption to future years if required. It also applies strictly only to testing for SARS-CoV-2 (which is the virus which causes COVID-19 disease).3

Jon Stride, Co-Chair of the ATT’s Technical Steering Group, said:

“Further to the measures formalised earlier this year, we think that the Treasury should extend relief for employers paying for employee testing for COVID-19 beyond 5 April 2022, especially as more people start returning to the workplace. There would also be a public benefit to introducing a wider-ranging and enduring exception from benefit-in-kind charges for employers who pay to test their employees for other highly transmissible diseases.”

One simple approach to achieve this would be to extend the existing powers given to the Treasury which allow them to apply the exemptions for coronavirus (SARS-CoV-2) testing to future years. These powers could be widened in scope to allow the Treasury to apply the same exemptions to other transmissible diseases as the Government considered necessary.

Jon Stride said:

“The current pandemic is not the first SARS coronavirus to spread throughout the human population and it therefore makes sense to allow the Treasury a wider power not just to extend the exemptions solely for SARS-CoV-2 testing, but also to give them the power to add additional diseases as and when it is determined necessary."

Notes for editors

  1. The ATT’s Budget Representation can be found here.
  2. The Government provided specific measures, in section 26 of Finance Bill 2021 and in sections 3 and 10 of the Social Security Contributions and Benefits Act 1992 (SSCBA), to provide temporary relief from the usual benefit in kind rules for employers who pay for or reimburse an employee for a COVID-19 antigen test in tax years 2020-21 and 2021-22. Helpfully, the legislation also includes a power to allow the Treasury to extend these exemptions to future years – but only in respect of testing ‘which detects the presence of a viral antigen or viral ribonucleic acid (RNA) specific to severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2)’.
  3. https://www.who.int/emergencies/diseases/novel-coronavirus-2019/technical-guidance/naming-the-coronavirus-disease-(covid-2019)-and-the-virus-that-causes-it