Extension to Income Tax exemption on employer-reimbursed coronavirus antigen

08 March 2021

It has been confirmed that the income tax exemption for employer-reimbursed coronavirus antigen tests will be in place for tax year 2020-21, but also for tax year 2021-22, and HMRC has published an associated policy paper.

What this means is that, where an employer pays an employee to reimburse them for the cost of a relevant coronavirus antigen test, there will be no Income Tax liability for either the employee or the employer.

The Income Tax exemption will apply retrospectively to any advance payments or reimbursements made to an employee for the cost of a relevant coronavirus antigen test made for the tax year 2020-21. There is a separate measure to remove prospectively the tax charge for employer-reimbursed coronavirus antigen tests in the 2021-22 tax year.

This measure only applies to relevant coronavirus antigen tests and isn’t extended to coronavirus antibody tests. The reason behind this is that the antibody tests only confirm whether an individual has previously contracted coronavirus, but the antigen test actually advises when an individual is currently affected by the coronavirus, and so confirms that they need to self-isolate to prevent its further spread.

National Insurance contributions (NICs) regulations have also been laid to ensure that there is no equivalent NICs charge on the payment, and there is a separate NICs tax impact and information note available.


The information in this article is accurate at the time of publication. For all the latest information, news and resources on how the COVID-19 pandemic is affecting payroll professions, visit our Coronavirus hub.