COVID-19 antigen test - Tax and NIC exemption

20 November 2020

A new temporary exemption has been introduced to make sure that employees who are given a relevant COVID-19 antigen test by their employer, will not be liable to an Income Tax Benefit in Kind (BiKs) charge. 

The exemption will apply to any relevant COVID-19 antigen test provided by an employer, on or after 8 December 2020, until and including, 5 April 2021. For any relevant tests which have been provided earlier in the tax year, before this instrument comes into force, HMRC will exercise its collection and management discretion, and will refrain from collecting any Income Tax or Class 1A National Insurance contributions (NICs) due on the provision of a test. 

The policy paper was published on 19 November 2020 and advises that the exemption will be introduced to minimise the financial and reporting burdens by the introduction of a new Income Tax exemption which will be introduced under section 210 of the Act (power to exempt minor benefits) which will ensure that relevant COVID-19 antigen tests which are provided by an employer are exempt from Income Tax. 

In order to be eligible for the exemption, a relevant COVID-19 antigen test will be 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 will be on the condition that the benefit of any provision in respect of relevant COVID-19 antigen tests are being made available to all of an employer’s employees, generally on similar terms. 

The NIC treatment of employer provided antigen tests will follow the tax treatment, which will mean that, once this tax exemption is in force, there will be no Class 1A NIC liability. 

The exemption will explicitly apply to relevant COVID-19 antigen tests only, and therefore does not extend to COVID-19 antibody tests. The reason for this is because antibody tests do not work for everyone, as it has been found that some people who have had the virus do not have the antibodies. Additionally, the antibody tests only give a historic view of whether an individual has previously contracted the COVID-19, and unlike the antigen test, it does not inform whether the individual is currently affected by the COVID-19, and so needs to self-isolate to prevent spreading the virus to other people. 


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