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Exemptions for Computers & Mobile Phones

Benefits in Kind: Exemptions for Computers & Mobile Phones

Purpose and intended effect

The policy objective

  1. To focus Government support currently available through tax exemptions for computers and mobile phones more effectively to ensure that:
  • resource is targeted at those who have poor access to computer equipment and low levels of IT literacy skills
  • employer's administration and compliance costs are kept to a minimum where computer equipment and mobile phones are made available for business purposes
  • misuse of tax exemptions is prevented.

Background

Computers & Computer Equipment

  1. Prior to April 1999 the loan of a computer by employers to their employees for personal use gave rise to a taxable benefit in kind. In 1999 an exemption was introduced that meant employers could loan up to £2,500 (incl. VAT) of computer equipment to their employees without giving rise to a tax charge or a Class 1A National Insurance liability (NICs). The exemption was part of a package of measures to encourage wider use of computers, increase IT skills for employees and increase access to computers for all citizens.
  2. The Home Computer Initiative (HCI), launched in January 2004, uses the tax exemption in conjunction with salary sacrifice arrangements so that employers can offer computers to their employees without incurring the cost themselves. The employer, with agreement from the employee, reduces the employee's cash salary to cover the cost of providing the equipment. In practice, under some schemes, employees are effectively buying the equipment out of pre-tax salary and, in some instances, have been offered game consoles and other computer related leisure equipment in exchange for a reduction in cash salary.

Mobile Phones

  1. Prior to April 1999 employees provided with a mobile phone for business purposes but which was also available for private use were liable to tax on a fixed annual benefit charge of £200. Some employees paid for their private use in order that this fixed charge would not apply. Employers complained that the record-keeping burden being placed on them was disproportionate to the tax charge.
  2. In 1999, an exemption was introduced to relieve employers of record keeping and compliance burdens. However, the exemption is being used by some employers to make available a number of mobile phones for use by the employees’ family in exchange for a reduction in cash salary.

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Rationale for Government Intervention

  1. The Government published its Digital Strategy in April 2005, which highlighted concerns over how effectively resource had been targeted through the HCI. This included an undertaking that HM Treasury would review the scheme and consider how best to target resource at those with the poorest access to information technology. It has become clear that this exemption was being used for purposes not intended by the Government and by definition those groups who are most likely to need assistance, such as job seekers and retired people, are unable to benefit from a scheme available only to employees. Furthermore low-paid individuals earning at the minimum wage are unable to take part. Of particular concern is that:
  • The HCI has been used to make available equipment that was not intended to be within the scope of the tax exemption,
  • Employees have been led to believe that they can buy equipment under an HCI scheme out of their pre-tax pay and qualify for the tax exemption,
  • What this means in terms of tax and National Insurance contributions foregone when coupled with salary sacrifice.
  • The HCI hasn’t been effective at targeting groups in society with the poorest access to computer equipment
  1. The exemption for mobile phones also needs to be reviewed. This was a deregulatory measure intended to reduce administrative and compliance costs for employers. The particular concerns are that:
  • It has been used to provide multiple mobile phones to members of the employee's family,
  • Employees have been led to believe they can buy phones out of their pre-tax pay and still qualify for the tax exemption,
  • What this means in terms of tax and NICs foregone when coupled with salary sacrifice.
  1. Mobile phones provided for use by family members have nothing to do with someone’s employment duties and in most cases will be entirely for private use. There is no reason in principle why they should not be chargeable to tax and Class 1A NICs in the same way as any other benefit in kind.
  2. The misinterpretation and application of the tax exemptions for mobile phones and computers, which effectively involves employees being given the opportunity to buy the equipment out of gross salary poses an unacceptable risk to the Exchequer in terms of tax and NICs forgone.

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Consultation

  1. Work to update and clarify the guidance on the HCI was undertaken in 2005, which involved the Department for Trade & Industry (DTI), the Office of Fair Trading and the HCI Alliance, (the Industry body representing HCI providers). However the interpretation and application of the tax exemption for computers made it necessary to consider changing the relevant provisions in the Income Tax (Earnings & Pensions) Act 2003 (ITEPA).
  2. The Government indicated that the HCI would be reviewed when it published the Digital strategy in April 2005. There had already been some evidence of misuse and there were concerns that the HCI was not reaching people with the poorest access to information technology.
  3. The Government had to consider the potential for a sizeable behavioural impact and the consequential risk to the Exchequer if a full consultation exercise was undertaken.

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Options

Option 1: Do Nothing

  • Leave the exemptions as they are.
  • Employers could continue to offer HCI schemes and multiple mobile phones for private use to employees or their families through salary sacrifice arrangements.
  • There would be no reporting requirements for employers in respect of their mobile phones. Nor would there be any reporting requirements for employers who loan computer/computer equipment where the annual benefit in kind is £500 or less. (Equivalent to £2,500 of computer equipment inclusive of VAT).
  1. This option maintains the status quo so there are no delivery or implementation issues.

Option 2: Re-focus the Exemptions

  • Amend the two current exemptions.
  • For mobile phones, limit the exemption to one mobile phone number per employee available for private use and exclude members of the employee’s family or household.
  • For computers, reduce the tax-exempt limit and legislate to exclude computer equipment used primarily for leisure purposes.

Implementation and Delivery Issues

  1. Employers that provide more than one mobile phone for private use or loan computer equipment where the total cash equivalent of the benefit in kind exceeds the reduced tax exempt limit would need to report this to HM Revenue & Customs (HMRC). Employers would report these on form P11D. The cost of providing additional phones for private use and any excess over the tax exempt threshold for computer equipment would be liable to a tax charge on the employee and Class 1A NICs on the employer.
  2. Reducing the tax-exempt limit for computer equipment made available for private use would only have a limited effect in ensuring that the exemptions met their original intentions. The pace of development of new technology means that achieving a practical way of policing the definition of computer that excluded leisure related equipment would be almost impossible. Therefore this would have a minimal effect in preventing misuse of the exemption and there would continue to be a significant cost to the exchequer.
  3. While it better reflects the falling cost of computer equipment, it does nothing to help target those who have the poorest access to technology such as the unemployed and the elderly.

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Option 3: Changing the Tax Treatment of Computers & Mobile Phones

This is the preferred option.

  • Abolish the exemption for computers and computer equipment
  • Limit the exemption to one mobile phone number per employee available for private use and exclude members of the employee’s family or household.
  • No reporting requirements for employers that provide equipment for private use within the new parameters of the mobile phone exemption.

Implementation and Delivery Issues

  1. Employers that provide more than one mobile phone for private use will need to report this to HMRC. Employers would report these in the usual way on form P11D. The full cost of providing additional phones for private use will be liable to a tax charge on the employee and Class 1A NICs on the employer.
  2. Where employers and their employees enter into new agreements to loan computer equipment for private use on or after 6 April, the employee will be liable to pay tax on the cash equivalent of the benefit in kind. Employers will be liable to Class 1A NICs on the same amount.
  3. Transitional arrangements will be put in place to ensure that employers and employees already in the process of setting up an arrangement to loan computer equipment under the Home Computer Initiative are not disadvantaged by the removal of the tax exemption.
  4. Employer and employee will need to have agreed the terms on which the computer is to be made available, in writing before 6 April. This does not have to be a formal hire agreement but should include specifications such as the cost/value of the equipment to be loaned and the salary/tax impact on the employee. Providing this is the case, the employee will not have to have taken physical possession of the computer before 6 April.
  5. During the transitional period some employers will be waiting for a direction from the Office of Fair Trading (OFT) as part of their HCI scheme. But they will need to have complied with the transitional arrangements so that the employees are entitled to the tax exemption if a formal hire agreement has not been signed. The OFT will only issue a direction if it is in the employees’ (the hirer) interest to do so, and, in the case of the HCI, the employees’ interest is the tax exemption. The OFT will continue to issue directions where it is in the hirers interest to do so for any hire agreement entered into up to and including 5 September but a direction cannot be applied retrospectively.
  6. Some employees may be provided with computer equipment or mobile telephones solely for business use. In this situation as long as any private use made of the equipment is not significant there will be no liability to tax. If significant private use is made of a computer provided for business purposes a tax charge will arise on the private use element based on the value of the computer and the extent of the business and private use. Employers will also be liable to Class 1A National Insurance contributions.
  7. Where additional mobile phones are made available for private use or where private use of a business mobile phone is significant it will be liable to a tax charge and Class 1A National Insurance in the same way as any other benefit in kind.
  8. The changes would only affect arrangements to loan equipment that start on or after 6 April 2006. Employer representatives will be invited to work with HMRC to develop guidance for handling any compliance and administration issues that flow from these changes.

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Costs and benefits

Sectors and groups affected

  1. Any business, voluntary organisation, charity or public sector employer that makes available mobile phones or computers for private use by their employees will be affected by the changes proposed in Options 2 and 3. Businesses that supply computers under the HCI will be affected by the changes to the computer exemption proposed in options two and three.

Equity & Fairness

  1. There are no race, Northern Ireland or other equality impacts under the current exemption and the proposals in Options 2 or 3 would not change that situation.
  2. The objective behind the tax exemption for computers was to increase access and improve IT literacy skills. HCI scheme providers could claim that removing the tax exemption runs counter to Government policies on providing better access to technology and increasing IT literacy skills with a potential social and educational impact. However, as the Government’s Digital strategy concluded, the scheme is poorly targeted on those who have poorest access to technology.
  3. The tax exemption was one part of a package of measures to provide access to technology in the community, in schools and in homes. Many employees have benefited from the tax exemption. But in view of the risk to the Exchequer the Government is now considering other ways to target resource more effectively towards those who still have the poorest access to information technology. No environmental impacts are expected.

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Benefits

Option 1: Do Nothing

Computers

  1. The policy intention behind the exemption for loaned computers was to encourage wider computer use and help employees improve there IT skills. It also removed the need for employers to keep records or report to HMRC details of computers made available to employees for private use unless the cash equivalent of the benefit in kind that arose from the loan of the computer was more than £500. This would remain unchanged.
  2. Employers could continue to use the exemption to make available computers to their employees for private useand benefit from the savings on reduced employer NICs.

Mobile Phones

  1. The policy intention behind the current exemption for mobile phones was de-regulatory, it removed the need for employers to keep records or report to HMRC details of mobile phones made available for private use by employees or their families. This would remain unchanged.
  2. Employers could continue to use the exemption to make available mobile phones to their employees for private useand benefit from savings on reduced employer NICs.

General

  1. This option maintains the status quo so there would be no administrative or one-off learning costs. Neither would there be an impact on employers’ compliance costs, as it does not involve any changes to the existing tax and NICs rules or reporting arrangements. Because employers are not required to report details of computers (on the first £500 of taxable benefit in kind) or mobile phones made available for private use they face lower compliance costs than would be the case if these benefits were subject to tax and Class 1A National Insurance.
  2. There is no requirement for employers to provide any data for HMRC to process in respect of these exemptions. However we estimate that employers could save up to £110 million per year by 2010/11 in employer NICs through salary sacrifice arrangements for computers and mobile phones.

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Option 2: Re-focus the Exemptions

Computers

  1. There would be a new reporting requirement where computer related equipment did not meet the new qualifying conditions or where the cash equivalent of the benefit in kind arising on computer equipment made available for private use exceeded the reduced tax exempt limit.
  2. Employers could continue to make available computer equipment to their employees for private use and use salary sacrifice arrangements to cover the costs. Employers could still make savings on NICs due on the lower wages/salaries paid.

Mobile Phones

  1. Employers that make available one mobile phone for private use by their employees or who provide additional phones for business purposes where there is insignificant private use will continue to benefit from the deregulatory objectives behind the mobile phone exemption.

General

  1. HMRC does not believe that employers would make any savings in terms of administration and compliance costs. However it is estimated that employers could save employer NICs of around £60 million per year through salary sacrifice arrangements for computers and mobile telephones.
  2. The proposed changes to the exemptions for mobile phones and computers would not deliver administrative or resource savings for HMRC. It is estimated however that these changes could protect Exchequer revenue in the region of £190 million per year by 2010/11.

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Option 3: Changing the Tax Treatment of Computers & Mobile Phones

Computers

  1. The exemption, which allows employers to make available computers for private use tax-free, is removed in Option 3. Employers could continue to loan equipment for private use but employees will be liable to pay tax on the benefit in kind that arises and employers will be liable to pay Class 1A NICs.
  2. Removing the tax exemption doesn’t affect equipment that has been provided for business purposes. This measure will protect the Exchequer against the rising cost of the scheme (up to £240 million by 2010/11) enabling resource to be targeted more effectively at people who have the poorest access to technology, such as the unemployed and the elderly.

Mobile Phones

  1. Employers will still be able to benefit from the deregulatory objectives behind the mobile phone exemption when only one mobile telephone is made available for private use or where a mobile phone is provided for business purposes and there is insignificant private use. Where a mobile phone is made available for private use through a salary sacrifice arrangement, employers will still be able to realise savings from reduced employer NICs on the lower wages/salaries paid, but to a much lesser extent than with the current exemption.

General

  1. HMRC does not expect that employers will make any savings in terms of reduced administration and compliance costs. However it is estimated that the amount employers could save in employer NICs through salary sacrifice arrangements for mobile phones could be around £15 million per year by 2010/11.
  2. There are not expected to be any administrative or resource savings for HMRC and it is expected that the new exemption for mobile phones will deliver only a negligible yield for the Exchequer. But it is estimated that the change will protect Exchequer revenue in the region of £70 million per year by 2010/11. Abolishing the exemption for computer equipment will deliver a yield for the Exchequer, which is estimated to be up £150 million per year by 2008/09.

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Costs

Option 1: Do Nothing

  1. It is estimated that the cost to the Exchequer in terms of tax and NICs forgone could be as much as £440 million by 2010/11. In addition some employers have been able to make savings on VAT and through claiming capital allowances on computers and mobile phones as business assets. Under this option, the Government’s resources are not effectively targeted at those in the UK with poor access to computer equipment and low levels of IT literacy skills.
  2. The exemptions for mobile phones and computers could continue to be used to make available a range of equipment that goes beyond what was intended, when the exemptions were first introduced. When used in conjunction with salary sacrifice arrangements this presents an unacceptable risk to the Exchequer in terms of tax and NICs forgone.

Option 2: Re-focus the Exemptions

  1. If, for the purposes of illustration, the exempt limit for computer equipment was reduced from £2,500 to £1,000 and mobile telephones were restricted to one per employee, it is estimated that the cost to the Exchequer in terms of tax and NICs forgone could be around £250 million by 2010/11.
  2. HMRC expect that this option would reduce the number of employees participating in schemes that provide equipment over and above that which can be loaned for private use tax-free. Extra compliance costs would arise from new reporting requirements for benefits in kind that are subject to tax and NICs under these proposals, the need for extra records to be kept and the implementation of extra coding notices for employees.
  3. There will be one-off compliance cost impacts for employers as they familiarise themselves with the details of the changes to the tax and NICs rules and make adjustments to their systems to accommodate those changes.
  4. Restricting the value and attempting to tighten the definition of equipment that qualifies for tax relief under an HCI scheme will have an impact on businesses that supply computer equipment to employers who run these schemes, since take-up of the schemes may decline. But there will still be significant incentives to offer technological/computer equipment under the exemption particularly where supplying this equipment for HCI schemes represents their core business.
  5. Under this option, the Government’s resources are still not effectively targeted at those in the UK with poor access to computer equipment and low levels of IT literacy skills.
  6. The current exemption for mobile phones does not limit the number or value of mobile phones that can be made available for private use. These proposals restrict to one the number that can be made available for private use, so there will be a reporting and record keeping requirement for employers that make available more than one. Records of additional mobile phones made available for private use will need to be kept and reported to HMRC.
  7. Where computer equipment is loaned for private use and the annual value of the benefit in kind exceeds the tax-exempt limit, the excess is liable to tax and Class 1A NICs and must be reported to HMRC.

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Option 3: Changing the Tax Treatment of Computers & Mobile Phones

  1. It is estimated that reducing to one the number of mobile telephones that can be made available for private use will limit the cost to the Exchequer in terms of tax and NICs forgone by in the region of £70 million by 2010/11.
  2. There would be recurring compliance costs for employers who offer employees equipment that does not qualify for tax relief but HMRC expect that these should either be negligible or at least relatively low. Compliance costs would arise from employers having to report to HMRC the benefits in kind that would be subject to tax and Class 1A NICs under these proposals, the potential need for records to be kept and the implementation of extra coding notices for employees.
  3. There will however be one-off compliance cost impacts for employers as they familiarise themselves with the details of the changes to the tax and NICs rules relating to computers and mobile telephones made available for private use and make adjustments to their systems to accommodate them. But HMRC believe those costs are likely to be negligible or at least very low.
  4. If the exemption from tax on the benefit in kind of computer equipment made available for private use is removed, HMRC anticipates that employers will be less likely to offer an HCI scheme and even where a scheme is offered employees will be less likely to participate. As a consequence it is anticipated that this will have an impact on businesses that supply computer equipment to employers that operate HCI schemes.
  5. Since January 2004, we estimate that the number of HCI suppliers has grown from 8 to 90, and the number of people employed by these suppliers has expanded to over one thousand. Many of these suppliers are involved in other lines of business (e.g. computer distribution or other types of employee benefit schemes such as childcare vouchers). But some of the smaller HCI suppliers that have been set up specifically to provide HCI schemes they will be impacted more significantly in the short term than businesses with more diversified business models, though it will of course be open to them to diversify in response to the change.
  6. This option may also have a minor impact on the computer distribution industry to the extent that it leads to additional sales of computers and peripheral devices (such as printers etc). It is difficult to estimate how many additional computers are sold as a result of the scheme which would not have been sold otherwise. It is likely that falling prices for computers are more important in boosting computer sales than the availability of the tax exemption. Evidence for this is provided by the fact that according to ONS data, the proportion of households owning a home computer rose from 27 per cent in 1996/97 to 62 per cent in 2004/05. There was particularly strong growth (29 percentage points) between 1999 and 2003, the years when the tax exemption suffered from low awareness and take-up. By contrast, since the re-launch of the HCI in 2004, the proportion of households owning a home computer has risen by only four percentage points, from 58 per cent to 62 per cent.
  7. There will be additional reporting and record keeping requirements for employers:
  • The current exemption for mobile phones does not limit the number or value of mobile phones that can be made available for private use. If employers wish to provide more than one mobile phone for private use to their employees they will need to keep records of additional mobile phones made available for private use and report details to HMRC on form P11D.
  • As with other benefits in kind, employers will need to keep records of all computers made available for private use and report details to HMRC annually on form P11D. Employees will be liable to pay tax and employers will be liable to pay Class 1A NICs on the benefit in kind that arises on computers made available for private use.

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Small Firms Impact Test

  1. No SFIT has been conducted. This is a Budget Measure and as such falls within the exceptional circumstances that have precluded us from consulting prior to a Budget announcement.
  2. In HMRC’s view none of the options set out in this paper will have a more significant or disproportionate impact on employers in the small business sector.
  3. However as set out in paragraphs 56 to 58 HMRC does expect there to be an impact for HCI providers. Particularly those in the small business sector that have been set up specifically to provide HCI schemes they will be impacted more significantly in the short term than businesses with more diversified business models, though it will of course be open to them to diversify in response to the change.

Competition assessment

  1. HMRC does not expect any of the changes proposed to result in significant competition effects or give a significantly unfair advantage to any one particular business sector over another. This is because the effects on NICs and compliance costs for particular employers in relation to their overall costs should be relatively small and that various different employers competing in various industries will be affected.
  2. This assessment has been informed through the use of the Cabinet Office Competition Test and also information available relating to the extent to which employers could be affected.

Enforcement, sanctions and monitoring

  1. To some extent HMRC expect Options 2 and 3 to be self-enforcing. As the exemptions stand, they provide incentives for both employers and employees to enter into salary sacrifice arrangements. HMRC anticipate that changing the exemptions will stop quite quickly new arrangements being entered into and this will therefore reduce the forecast of take up compared to that, if no action is taken.
  2. Where employers decide to continue to offer more than one mobile phone for private use and or loan computer equipment for private use they will need to keep the appropriate records and report the benefit in kind to HMRC.
  3. No new sanctions will be required to enforce or monitor this; existing procedures will apply to ensure accurate reporting and accounting for the tax and National Insurance due on any benefit in kind that arises.

Monitoring Policy Options

  1. With the aim of gathering information about the impact of the changes, HMRC will contact organisations that provide schemes to enable employers to offer the private use of computer equipment and mobile phones to employees. The aim is to find out about changes in the numbers of employers and employees entering into such arrangements. In particular where income tax and NICs liabilities arise as a result.
  2. HMRC will also monitor information received from P11D expenses and benefits returns for indications of any significant changes in the numbers of employers and employees paying tax and NICs on the benefit in kind of loaned computer equipment and mobile phones. There isn’t a specific box on the P11D return for these particular loaned assets to be reported but any significant trend is likely to show up in the data.

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Implementation and Delivery Plan

  1. Implementation and delivery of the recommended option (Option 3) will be in accordance with the usual Budget procedures. In due course HMRC will also undertake a review of the figures in this RIA in Standard Cost Methodology terms.
  2. Changes to the exemptions for computers and mobile phones were announced in the Chancellor's Budget statement on 22 March 2006 and will take effect from 6 April 2006. However those people already participating in schemes based on the law as it applied prior to 6 April will not be affected until the period of their current agreement expires and they enter into a new agreement.
  3. A note setting out the changes announced has been published and made available via HMRC and HM Treasury websites. HMRC staff have been provided with an overview of the changes announced, and a technical brief which has enabled them to deal with enquiries. In addition the HMRC technical helpline specialising in personal tax matters was fully briefed on the changes announced so that enquiries of a particularly technical or specialist nature could be handled.
  4. HMRC will invite employer representatives to work with them as they develop guidance, which will articulate their approach for handling compliance and administration issues that flow from the changes announced in the Budget.
  5. Details of the changes announced will be incorporated into the HMRC Employment Income Manual (EIM), the booklet 480 – Expenses & Benefits A Tax Guide, and the electronic guidance on benefits in kind available via the HMRC website. All this guidance is available to HMRC staff and members of the public and will be updated when the Finance Bill receives Royal Assent, usually in July.

Post Implementation Review

  1. A post implementation review will be conducted two to three years after implementation in accordance with Cabinet Office guidelines. HMRC will seek to establish how effective the policy has been at changing behaviour with regard to the loan of computer equipment and mobile phones and they will do this using the information they collect from the monitoring and evaluation work proposed in paragraphs 68 and 69. The review will focus on the compliance cost benefit analysis.

Summary & Recommendation

  1. Industry forecasts suggest that 5 million people have been offered a PC through an HCI scheme. This combined with rapid advances in technology and the falling cost of computer equipment suggests that now is the right time to make the changes recommended and to target help towards those who have not been able to benefit from the tax exemption for computer equipment.
  2. Around 50 million mobile phones are currently in use in the UK. A scheme which makes available mobile phones for private use by employees and each member of the employees family is likely to be popular, particularly when the employee incurs the cost of the phones out of their pay before tax and NICs is deducted. This combination of factors suggests that now is the right time to make the changes proposed.
  3. The schemes currently available that provide multiple mobile phones and a range of computer related leisure equipment instead of cash pay go beyond the purpose for which the exemptions were originally intended and poses an unacceptable risk to the Exchequer.
  4. There are no environmental impacts and any social impacts will be minimal based on the falling cost of computer equipment. The estimated costs in 2010/11 are summarised in the table below.
Cost of Salary Sacrifice for Existing Exemptions

Employers

Employees

Exchequer

+£110m

+£330m

-£440m

Cost of Salary Sacrifice for Proposed Options - Option 1

Mobile Phones

+£50m

+£150m

-£200m

Computers

+£60m

+£180m

-£240m

Total

+£110m

+£330m

-£440m

Cost of Salary Sacrifice for Proposed Options - Option 2

Mobile phones

+£15m

+£55m

-£70m

Computers

+£45m

+£135m

-£180m

Total

+£60m

+£190m

-£250m

Cost of Salary Sacrifice for Proposed Options - Option 3

Mobile phones

+£15m

+£55m

-£70m

Computers

Nil

Nil

Nil

Total

+£15m

+£55m

-£70m

Tax & NICs Losses And Gains For Options

Option 1

Nil

Nil

Nil

Option 2

-£50m

-£140m

+£190m

Option 3

-£95m

-£275m

+£370m

Annual Compliance Cost Effects Of Options For Employers

Option 1

Nil

Option 2

-£Neg

Option 3

-£Neg

  1. Analysis of the options suggests that the Home Computer Initiative has worked well in reaching those in employment. However in accordance with the commitment given by the Government in the Digital Strategy published in April 2005 help could be better targeted at those with the poorest access to technology.
  2. Options 1 and 2 do not enable Government to focus resource towards those who have the poorest access to information technology. Nor do these options do enough to address the issues of misuse, which present an unacceptable risk to the Exchequer.
  3. HMRC therefore recommend Option 3 which protects against the increasing risk to the Exchequer but still retains the flexibility for employers to make available mobile phones and computer equipment for business use without any tax or NICs implications. It enables employees to take advantage of the amended tax exemption that allows one mobile phone to be made available for private use tax-free and enables the Government to focus resource on helping to meet some of the challenges in the Digital Strategy on improving access to computer equipment for the low paid, unemployed and the elderly.

Contact Details:

Elizabeth O’Donnell

Room 1E/10

100 Parliament Street

London

SW1A 2BQ,

Telephone: 020 7147 2502,

E-Mail: Paul Harris