Policy paper

Income Tax and National Insurance contributions exemption for employer-provided coronavirus antigen tests

Updated 6 July 2021

Who is likely to be affected

Employers who choose to provide their staff with a relevant coronavirus (COVID-19) antigen test, and employees who receive a relevant test from their employer.

General description of the measure

This instrument provides for a new temporary exemption to make sure that employees who are given a relevant coronavirus antigen test by their employer, will not be liable to an Income Tax benefit in kind (BiKs) charge.

The exemption will apply to any relevant coronavirus antigen test provided by an employer, on or after 8 December 2020, until and including, 5 April 2021. For any relevant tests which have been provided earlier in the tax year, before this instrument comes into force, HMRC will exercise its collection and management discretion and will refrain from collecting any Income Tax or Class 1A National Insurance contributions due on the provision of a test.

Policy objective

This measure is designed to minimise the financial burdens on employees, and the Class 1A National Insurance contributions and reporting requirements on employers who provide a relevant coronavirus antigen test.

Background to the measure

The government is committed to supporting businesses and individuals through the coronavirus pandemic, and this measure aims to make sure the use of relevant antigen testing procedures by employers are not subject to a tax charge.

No consultation has been held as this is a minor and temporary change which is wholly relieving.

Detailed proposal

Operative date

This measure will have effect from 8 December 2020 until 5 April 2021.

HMRC will exercise its collection and management discretion and will not collect any Income Tax and Class 1A National Insurance contributions due on the provision of a relevant test from 6 April 2020 until the regulations take effect, provided the conditions set out in the legislation are met.

Current law

A benefit is defined in section 201(2) of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA03) as ‘a benefit or facility of any kind’. When a benefit is provided to an employee (or to any member of their family or household) by reason of the employment, it is defined as an ‘employment-related benefit’. The amount of a benefit which is chargeable as earnings is the ‘cash equivalent’ of the benefit less any amount made good by the employee.

The definition of what is a benefit is therefore very wide and currently includes an employer provided antigen test as they are not covered by existing exemptions.

The provision of a coronavirus antigen test does not fit in to the existing exemptions for employer provided health screening, medical check-ups (section 320B of the Act) or medical treatment (section 320C of the Act). As testing would in most instances be expected to be repeating and the benefit cost would exceed £50, the exemption for trivial benefits (section 323A of the Act) would also not apply.

Proposed revisions

To minimise the financial and reporting burdens, a new Income Tax exemption will be introduced under section 210 of the Act (power to exempt minor benefits) to make sure that relevant coronavirus antigen tests provided by the employer are exempt from Income Tax.

To be eligible for the exemption, a relevant coronavirus antigen test is defined as a test which can detect the presence of a viral antigen or viral ribonucleic acid specific to severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2).

As required by s210(2) of the Act, the exemption provided for in this instrument will be conditional on the benefit of any provision in respect of relevant coronavirus antigen tests being made available to all of an employer’s employees generally on similar terms.

The National Insurance contributions treatment of employer provided antigen tests will follow the tax treatment, so once this tax exemption is in force there will be no Class 1A National Insurance contributions liability.

The exemption will specifically apply to relevant coronavirus antigen tests only, and does not extend to coronavirus antibody tests. This is because antibody tests do not work for everyone, as some people who have had the virus do not have antibodies. Furthermore, antibody tests only give a historic view of whether an individual has previously contracted the coronavirus, and unlike the antigen test, it does not inform whether the individual is currently affected by the coronavirus and needs to self-isolate to prevent spreading the virus to other people.

Summary of impacts

Exchequer impact (£million)

2020 to 2021 2021 to 2022 2022 to 2023 2023 to 2024 2024 to 2025 2025 to 2026
Empty Empty Empty Empty Empty Empty

The Office for Budget Responsibility has included the impact of this measure in its forecast at Budget 2021.

Economic impact

This measure is not expected to have any significant economic impacts.

Impact on individuals, households and families

This proposal is expected to have a positive impact on employees who receive a relevant coronavirus antigen test from their employer. This proposal makes sure that employees will not be liable to an Income Tax BiKs charge. Customer experience is expected to remain broadly the same as it does not change how individuals interact with HMRC.

This measure is not expected to impact on family formation, stability or breakdown.

Equalities impacts

It is not anticipated that there will be impacts for those in groups sharing protected characteristics.

Impact on business including civil society organisations

This proposal is expected to have a positive impact on employers in general. This proposal will have a positive impact by making sure employers no longer need to report the provision of a benefit. There will be a one-off cost in the form of familiarisation with the change. There are not expected to be continuing costs. There will be a one-off saving from not having to report information on the provision of a relevant test for this year. Customer experience is expected to stay broadly the same as this proposal does not significantly change how employers interact with HMRC. There is expected to be no impact on civil society organisations.

Operational impact (£million) (HMRC or other)

There will be negligible operational impact to HMRC for this change.

Other impacts

Other impacts have been considered and none has been identified.

Monitoring and evaluation

The measure will be kept under review through communication with affected taxpayer groups.

Further advice

If you have any questions about this change, contact the employment income policy team by email: employmentincome.policy@hmrc.gov.uk.


The Right Honourable Jesse Norman MP, Financial Secretary to the Treasury, has read this tax information and impact note and is satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impacts of the measure.