Government scraps plan to class coronavirus tests as taxable benefit in kind

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Controversial plans to get workers to pay income tax on coronavirus testing kits purchased by their employer have been scrapped by the government.

Concerns emerged after HM Revenue & Customs issued new workplace benefits guidance that stated Covid-19 testing kits or tests carried out by a third party, which have been purchased by an employer for its employees, were to be treated as a taxable benefit in kind.

The classification of testing kits as a benefit in kind was heavily criticised by Treasury Committee chairman Mel Stride, who asked chancellor Rishi Sunak to look into the issue.

He said: “Many employees, especially healthcare and hospitality workers, are required to undergo regular coronavirus testing.

“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.”

Sunak told MPs on Tuesday that he would look into the issue “very quickly”. HMRC has since removed the reference to testing kits from its guidance, indicating that staff would not have to pay tax on them.

Organisations in some sectors including healthcare and hospitality are undergoing weekly coronavirus tests for the safety of their colleagues and visitors.

Guidance published by the Information Commissioner’s Office in May said that employers still needed to comply with the General Data Protection Regulation and Data Protection Act when handling Covid-19 test data.

They can keep lists of employees who have had symptoms or tested as positive, but they need to ensure the processing of this data is “necessary and relevant for the stated purpose”.

This article was updated on 8 July 2020.

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