Financial Secretary to the Treasury (): On 9 July 2020, the Government agreed to introduce
an income tax exemption and National Insurance contributions
(NICs) disregard to ensure that Coronavirus antigen testing
provided to employees outside the Government’s national testing
scheme will not attract tax and NICs liabilities.
The Government is now introducing a second income tax exemption
and NICs disregard, to ensure that employees who purchase their
own coronavirus antigen test and are reimbursed by their
employer, will not attract tax and NICs liabilities.
The Government recognises the importance of COVID-19 testing.
Currently, regular tests are available through the Government
testing programme to a wide range of employees, including NHS
workers. If an individual is tested through the Government
testing programme, no tax or NICs liability will arise.
Under normal rules, the cash reimbursement of a test by an
employer to an employee, would constitute earnings, and the
amount reimbursed would be subject to income tax and Class 1 NICs
as a result. However, the Government introduced NICs regulations
- The Social Security Contributions (Disregarded Payments)
(Coronavirus) (No. 2) Regulations 2020 (SI 2020/1523) on 14
December and will introduce a tax exemption in the next Finance
Bill to ensure that no tax and NICs liabilities arise.
These exemptions will ensure that Income Tax and NICs will not be
due on employer-reimbursed antigen tests carried out during the
current tax year 2020-21.
Easement for employer-provided cycles exemption
The tax exemption for the employer provision of cycles and
cyclist’s safety equipment was introduced to support employers in
promoting healthier journeys to work and to encourage green
commuting. Many employers offer this in the form of Cycle to Work
schemes.
One of the conditions of the exemption is that the cycling
equipment provided should be used mainly for qualifying journeys
(to or from work or in the course of work).
The Government’s COVID-19 restrictions have required many
employees to work from home where possible. Therefore, many
existing users of the scheme are not travelling to work and may
be unable to meet the condition for qualifying journeys. Under
the current application of the rules, these individuals would
become liable to an income tax Benefit in Kind charge.
However, the Government will introduce a time limited easement to
disapply the condition which states that cycles must be used
mainly for qualifying journeys. The easement will apply to
existing users and will allow those individuals to continue to
benefit from the tax exemption without needing to meet the
qualifying journeys condition.
The easement will be available to employees who have joined a
scheme and have been provided with a cycle or cycling equipment
on or before 20 December 2020. The easement will be in place
until 5 April 2022, after which the normal rules of the exemption
will apply.
Therefore, employees who have joined a scheme and have been
provided with a cycle or cycling equipment on or before 20
December 2020, will be permitted to an easement, and will not
have to meet the qualifying journeys condition until 5 April
2022. Employees who join a scheme from 21 December 2020 will need
to meet all the normal conditions of the exemption.
