New regulations to exempt payments made to employees for coronavirus antigen tests from NICs
The Social Security Contributions (Disregarded Payments) (Coronavirus) (No. 2) Regulations 2020 will come into force on 25 January 2021 to provide that payments made by employers to employees to cover or reimburse the costs of coronavirus (COVID-19) antigen tests are to be disregarded for NICs purposes, and so there will be no NICs liability for either the employer or the employee. The Government has also stated that a corresponding Income Tax exemption for such payments is to form part of the Finance Bill 2021. Antibody tests, which detect whether the employee has previously been infected with COVID-19, are not covered by these provisions.
The regulations apply to payments made to employees on or after 25 January 2021 but before 6 April 2021, but HMRC will exercise its management discretion in relation to payments made earlier in the 2020/21 tax year and will refrain from collecting any Income Tax or NICs due, provided the conditions set out in the legislation (other than the timing of the payment) are met.
The regulations follow the provisions previously made in relation to the Income Tax and NICs exemption for employer-provided COVID-19 antigen tests.