Rishi Sunak U-turns on plan to tax workers for coronavirus tests
An exemption will be created so workers do not pay tax on coronavirus tests (PA)
Rishi Sunak has backtracked on plans to charge income tax on coronavirus tests which could have cost frontline staff thousands of pounds.
The move came after Treasury select committee chair Mel Stride raised the issue with the Chancellor, saying it would disproportionately affect healthcare and hospitality workers.
And the Government confirmed it has now changed tack, vowing a new exemption in place to protect their pay from reductions caused by regular testing.
On Monday new HMRC guidance stated Covid-19 tests purchased by employers for their staff would be treated as a taxable benefit in kind for the employee.
In response Mr Stride wrote to Mr Sunak: "Given that many employers will require these tests on a regular basis, especially in health care settings but also in many other industries (such as hospitality), the tax bills could soon mount up and this does not seem to be a helpful policy at this time."
He warned the policy "risks deterring workers from taking employer-sponsored tests”.
But the Chancellor has now replied to the committee chair, saying testing will not add to employees’ tax burned in the financial year 2020/21.
"As most workers will already be able to access tests for free through the NHS, we expect this to only impact a small number of individuals," he said.
"However, given the importance of widespread testing, the Government wants to ensure that all employers who wish to provide testing to their employees can do so without increasing their tax liability.
"We are therefore introducing a new income tax and NICs exemption from income tax for employer-provided Covid-19 antigen tests."
A Treasury spokesperson confirmed the move, saying HMRC “will amend their guidance as soon as possible to reflect this change”.
Mr Stride welcomed the move, saying he was "glad that common sense has prevailed" and thanking Mr Sunak for having "reversed this decision so swiftly".