Workers forced to pay extra tax if employers cover costs of coronavirus tests

Workers will have to pay extra tax when an employer is billed for their coronavirus test, under shock Treasury rules.

The practice has been condemned by the Conservative chair of the Treasury committee, who urged Rishi Sunak to think again.

“Many of our key workers could be faced with the perverse incentive of avoiding employer-sponsored tests in order to reduce their tax bill,” Mel Stride said.

“This cannot be right. I’ve asked the chancellor to look into this as soon as possible.”

The loophole has emerged in new guidance from HMRC, which states: “Coronavirus (Covid-19) 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 not included in a worker’s salary – which means a cash value will be assigned to the coronavirus test and the employee must pay income tax on that amount through pay-as-you-earn.

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