We will use your email address only for sending you newsletters. Please see our Privacy Notice for details of your data protection rights.

Tax authorities have confirmed that tests will be treated as a “benefit in kind” and will be subject to extra income tax for employees. With some companies requiring regular tests, the tax bills will mount, Treasury Committee chairman Mel Stride warned. Chancellor Rishi Sunak promised to look into the issue “very quickly”.

“Many employees, especially healthcare and hospitality workers, are required to undergo regular coronavirus testing,” Mr Stride told Parliament.

“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.”

Mr Sunak said: “I’m delighted with him for raising this with me and, of course, we will look into it very quickly.”

The HMRC guidance called “How to treat certain expenses on benefits provided to employees during coronavirus” was issued on Monday.

On coronavirus tests, the guidance 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.”

That means a cash value will be assigned to the coronavirus test by the employer, then the employee will pay income tax on the amount through PAYE.

Benefits in kind are benefits which employees receive from their employers that are not included in their salary.

They are often referred to as “perks” or “fringe benefits”, but usually relate to things such as company cars, private medical insurance paid for by the employer and cheap or free loans.

But some company benefits can be tax-free, such as childcare and canteen meals.

A Government official said tests carried out by the NHS were not taxed. Only privately conducted tests were counted as a taxable benefit.

Source: Read Full Article