Press Release of the Day – 7th July

Workers forced to pay Income Tax on coronavirus testing

HMRC guidance published yesterday (6 July) clarified that employees will face a taxable benefit in kind when their employer pays for coronavirus testing.

This means that employees will pay Income Tax when their employer pays for a test. As many employers will require these tests on a regular basis, the tax bills could soon mount up.

Rt Hon. Mel Stride MP, Chair of the Treasury Committee, has written to Rt Hon. Rishi Sunak MP, Chancellor of the Exchequer, to look into this matter as soon as possible.

Commenting on the correspondence, Mr Stride said: “Many employees, especially healthcare and hospitality workers, are required to undergo regular coronavirus testing. This new guidance is unclear and will worry a large number of workers.

“If these tests are to be treated as a taxable benefit in kind, the tax bill for workers could soon mount up.

“Many of our key workers could be faced with the perverse incentive of avoiding employer-sponsored tests in order to reduce their tax bill.

“This cannot be right. I’ve asked the Chancellor to look into this as soon as possible.”

Notes to Editors:

HMRC issued the guidance ‘How to treat certain expenses on benefits provided to employees during coronavirus’ on 6 July 2020 here. On coronavirus tests, the guidance states:

Coronavirus (COVID-19) testing kits or tests carried out by a third party which have been purchased by you to provide to your employees, are treated as a taxable benefit in kind on the employee.

Benefits in kind are benefits which employees receive from their employers that are not included in their salary. Based on HMRC’s guidance, a cash value will be assigned to the coronavirus test by the employer, and the employee will pay Income Tax on this amount through Pay As You Earn (PAYE).

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