Exemptions for COVID-19 testing and home office equipment

The measure

The government has made a number of announcements related to COVID-19 easements. These include:

  • the introduction (with retrospective effect) of an exemption from income tax for employer-reimbursed coronavirus antigen tests. This will apply to reimbursements during the 2020/21 tax year. The corresponding exemption for National Insurance contributions (NICs) is already in force;
  • an extension to the exemptions from income tax and NICs for both employer-provided and employer-reimbursed antigen tests until the end of the 2021/22 tax year; and
  • an extension to the income tax and NICs exemption for employer-reimbursed expenses that cover the cost of relevant home office equipment until the end of the 2021/22 tax year.  


Who will be affected?

These measures are likely to apply to a wide range of employers and employees. Many employers have chosen to support employees working from home because of the pandemic and have welcomed the opportunity to provide relevant equipment tax-free for employees or to provide equivalent reimbursement. Many others with employees in frontline jobs will want to be able to continue to provide tax-free COVID-19 testing.


When will the measure come into effect?

These exemptions will continue to apply for the 2021/22 tax year. 

Our view

Employers and employees will welcome this ongoing relaxation, although it should be noted that the COVID-19 testing exemption only covers antigen testing and no other forms of testing, such as antibody tests.