personal finance

Frontline workers in UK set to pay extra tax for Covid-19 tests


Rishi Sunak, the chancellor, came under pressure to reverse a decision to force frontline workers to pay income tax on Covid-19 tests purchased by their employers, as he was warned that it risked deterring people from getting checked for the coronavirus.

HMRC guidance published this week states that workers will face a taxable benefit in kind when their employer pays for coronavirus testing. The taxation will cause a reduction in take-home pay.

The chair of the Treasury select committee, Mel Stride, said employees, such as healthcare and hospitality workers, who had to have regular testing, could face mounting tax bills and be discouraged from getting checked.

Testing has been a hugely contentious strand of Downing Street’s response to the pandemic. Following criticism that the government had been too slow to roll out the tests, the health secretary, Matt Hancock, pledged that 200,000 would be carried out daily by the start of June.

On Monday it emerged that the government would no longer publish daily testing data, after five weeks of failing to release the statistics.

Stride, who is urging the Treasury to look into the HMRC testing guidance, 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.”

Guidance published by HMRC states: “Coronavirus 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 those which workers receive from employers which are not included in their salary, such as cars. Employees have to pay income tax on these benefits; the tax is calculated based on the benefits’ value, then deducted from wages through PAYE. The guidance makes no mention of NHS staff, or other key workers, being exempt from the tax.

In a letter to the chancellor on Tuesday, Stride, the Conservative MP for Central Devon, said the decision to treat tests purchased by employers as a benefit in kind was not “a helpful policy at this time”.

He added: “As you know testing for Covid-19 is an essential precaution and supports our contact-tracing systems, and it is vital to carry out as much testing as possible to ensure we can return to a normal economy.

“I think this policy risks deterring workers from taking employer sponsored tests. Many of those affected will be in frontline jobs in hospitals and other similar settings, and it seems wrong that a disproportionate tax burden should fall on them at this time.”

Sunak, asked by Stride, during Treasury questions on Tuesday, whether he would investigate, replied: “Of course we will look into it very quickly.”



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