The cost of private Covid tests for holidaymakers this summer could fall below £50 if they are exempted from VAT.
The exemption is reported to be under consideration by the Treasury.
HMRC has already ruled that the gold standard PCR tests will be exempt from VAT when they are administered or overseen by a registered nurse, The Telegraph reported.
The newspaper cited “senior sources” as saying the Treasury could go further and fully exempt the tests from the charge which can add 20% to the price which can range from between £60 and £300 per test.
The exemption would mean a saving of between £40 and £240 for a family of four for a single test each on their return.
The government is insisting as part of its traffic light system for resuming international travel from next month that all people returning to the UK must take at least one PCR test on or before the second day of their arrival even if they are coming from a safe ‘green list’ country.
Most EU countries have exempted tests from VAT after the EU recommended the move. Their average charge of £62 is half the £130 average in the UK.
Government sources confirmed the VAT charge was “under review” and “all options are on the table.”
One source told The Telegraph: “Exempting the tests from VAT is being seriously considered. The main concerns are that test providers pass on the saving to travellers and whether it will set a precedent for removing the charge in other areas of the economy.”
Transport secretary Grant Shapps has pledged to drive down the costs of privately-administered PCR tests for travellers and threatened to remove “profiteering” companies from the government’s register of approved providers if any are found to be “ripping off” holidaymakers.