EIM21683 | Benefits and exemptions: coronavirus diagnostic tests

This guidance concerns coronavirus diagnostic tests only. A coronavirus diagnostic test, or similar, identifies whether an individual is infected with coronavirus at the time of the test by detecting the presence of a viral antigen (such as lateral flow tests) or viral ribonucleic acid (RNA) (such as PCR tests) specific to coronavirus. Coronavirus antibody tests, which can detect whether a person has previously been exposed to coronavirus rather than a current infection, are not tax exempt and not covered by this guidance.

If an individual is eligible for a coronavirus test through the government testing programme, the tests are provided free of charge and no tax or NICs liability will arise.

Employer provided coronavirus diagnostic tests

On 9 July 2020, the government announced that the provision of coronavirus diagnostic tests by employers, either directly or by purchasing tests carried out by a third party, would be exempt from Income Tax until 5 April 2021. This exemption has since been extended until 5 April 2023. As a result, no liability to Income Tax will arise on the provision of a coronavirus diagnostic test by an employer during the 2020 to 2021, 2021 to 2022 or 2022 to 2023 tax year, where they are provided to all of the employer’s employees on similar terms.

Employer reimbursed coronavirus diagnostic tests

On 17 December 2020, the government also announced that the reimbursement of the cost of a coronavirus diagnostic test by an employer to an employee would be exempt from Income Tax until 5 April 2021. This exemption has since been extended until 5 April 2023. As a result, no liability to Income Tax will arise on the reimbursement of the cost of a coronavirus diagnostic test by an employer during the 2020 to 2021, 2021 to 2022 or 2022 to 2023 tax year.

Where the test is not provided, nor reimbursed, by the employer there is no deduction available to the employee for the cost of obtaining a test.

Both the provision and reimbursement of costs of a coronavirus diagnostic test are disregarded for NICs purposes until 5 April 2023. As a result, no liability to Class 1 or Class 1A NICs arises for an employer provided or reimbursed coronavirus antigen test during the 2020 to 2021, 2021 to 2022 or 2022 to 2023 tax year.