The government is reportedly considering a complete VAT exemption for all forms of Covid testing, a move that would likely cut test prices to below £50pp.
The Telegraph reports that in addition to exempting PCR tests from VAT when administered or overseen by a registered nurse, the Treasury is looking at whether to fully exempt all Covid tests from the tax charged at a rate of 20%.
It would mean the cheapest PCR tests currently available to the public, which currently range from £60pp to upwards of £100pp, could fall to below £50pp.
Testing will be a feature of all three categorisations of countries under the government’s new traffic light system for the resumption of international travel.
Those arriving from "green list" countries will have to take a pre-departure test and then a PCR test on day two of their return.
Those returning from "amber list" or "red list" countries will have to take a pre-departure test and tests on days two and eight of their mandatory 10-day self-isolation period.
There has been widespread criticism of the cost of testing in the UK, with easyJet chief Johan Lundgren warning the day two PCR test requirement for green list arrivals alone could price families out of leisure travel.
Boris Johnson, transport secretary Grant Shapps and aviation and maritime minister Robert Courts have all pledged to take action on the cost of testing.
During an appearance before the transport committee last week, Courts said: "We’ll be seeing what we can do over the course of the next few weeks to help with the cost of tests. There is a number of different ways we can do that. We can look at both the possibility of government-provided tests for the pre-departure tests [prior to people’s return to the UK] and also the cost here."
Additionally, he said the government was aware of the cost burden of "gold standard" PCR tests, which the government say are essential for genomic sequencing to track new Covid-19 variants.
A number of EU countries have already exempted testing from VAT, bringing the cost down to below £50pp.
A government source, cited by The Telegraph, said a VAT exemption for testing was among a number of options "under review" and "on the table".