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Workers forced to pay more than £3,000 a year in tax for their own coronavirus tests

Marianna Hunt
A phlebotomist prepares to administer Covid-19 tests to employees at the Intermountain Regional Landfill office in Sandy, Utah -  Kim Raff/Bloomberg

Employees could see their take-home pay cut by more than £3,000 per year if they have to be regularly tested for coronavirus. 

The tests, which many key workers will have to take as often as once a week, will be treated as a taxable benefit in kind, HM Revenue and Customs has said. This means employees will have to pay extra income tax every time they take a test.

Mel Stride, MP and chair of the Treasury Select Committee, said this risked “deterring workers from taking employer sponsored tests”. He added that it was wrong that frontline workers should face a disproportionate tax burden at this difficult time.

Taxable benefits in kind are usually perks such as company cars and medical insurance. Expenses that are required by the nature of a person’s work are typically not taxed, for example working uniforms and accommodation while on business trips. 

Adding the cost of coronavirus tests to an employee’s tax bill will disproportionately affect those working in construction and the hospitality industry, many of whom will be required to take tests on a regular basis. NHS workers and anyone else who has their test provided by the Government via the national testing programme will not be subject to the tax. 

People who fill out a self-assessment tax return will have to declare the cost of any tests on it. 

Some frontline workers are now being tested as often as once a week and at-home coronavirus tests can easily cost £150 or more. That means testing one employee every week for a year could cost £7,800.

Tax codes explained

A higher-rate taxpayer earning £60,000 would pay income tax of 40pc on this, equal to a total of £3,120 over the year, according to calculations by wealth manager Quilter. Someone making £30,000 a year, paying the lower rate of income tax, would face a 20pc charge and a payment of £1,560. 

Quilter’s Rachael Griffin said: “The Government has a steep bill that keeps on growing due to Covid-19 and the Chancellor will be looking at any way to start paying some of it off.

"It’s unclear whether this was a snap decision made without thinking through the consequences or a money-making ploy. However, what is clear is the tax bills generated by having Covid-19 tests considered benefits in kind will be substantial.”

She added that frontline workers would likely be worst hit. “We cannot on the one hand ask these people to put themselves on the line and then rob them several weeks later,” she said. 

Tim Stovold of accountancy firm Moore Kingston Smith said: “It is absurd that HMRC should collect tax on employer provided kits. It just creates another barrier to getting people back to work.”

A Government spokesman said it was looking into the issue.