Tax and NI exemption for employer reimbursed coronavirus swab tests
15 December 2020
The HMRC External Affairs team has advised that the Government will implement a temporary tax and National Insurance (NI) exemption which will ensure that any employees who buy their own coronavirus swab tests, and are subsequently reimbursed by their employers, will not see any tax or NI labilities attached to the purchase of the test, in the current tax year.
A coronavirus swab test refers to a test that identifies the presence of a viral antigen or viral ribonucleic acid (RNA) that is specific to severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2).
Ordinarily, the cash reimbursement of a test by an employer to an employee would be classed as earnings and so would be subject to tax and NI. This measure, however, will ensure that employees can access a coronavirus swab test for business reasons, such as the requirement to hold a negative test result to travel abroad for business, without any tax and NI liabilities arising.
A policy paper was released by HMRC to confirm the temporary exemption, and the measure will have effect from 25 January 2021 up until 5 April 2021. For any relevant advance payments or reimbursements made within tax year 2020-21, but prior to the measure coming into force, HMRC will refrain from collecting any NI or tax due on the reimbursement of a relevant coronavirus antigen test.
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.