Although firms can reduce their tax bill by taking part in the Home Computing Initiative (HCI), which was launched four years go, few have actually done so. The Office of the E-envoy wants to increase awareness within British business of the benefits of the HCI through a new set of guidelines that promote the tax, productivity and educational benefits of the scheme.
Launching a consultation on the government's proposals on Tuesday, Cabinet Office minister Douglas Alexander said that HCI schemes benefit businesses, employees and the wider community by increasing access to PCs. However, he admitted that take-up in the UK has been limited. "This is due to a variety of factors including low awareness of the tax exemption and a lack of knowledge on the part of employers about how to administer and implement schemes. The proposed guidelines aim to help employers overcome these barriers,” explained Alexander.
HCI, which was launched in the 1999 Finance Act, was introduced to encourage companies to offer PCs to their workforce using a similar model to that used for company cars.
Under an HCI scheme, a firm can loan a PC to an employee and recover the cost over time -- typically three years -- through a reduction in the annual gross salary of the employee. Once the leasing period is over, the employee can purchase the computer at a "fair market price" which, given the rapid depreciation in the cost of PCs, is likely to be very little.
This salary sacrifice benefits the employer, who doesn’t have to pay national insurance contributions on this amount. The employee also benefits financially -- they've effectively bought a PC using gross income rather than losing some of it to tax.
The government is keen on HCI because it believes a similar scheme in Sweden caused a significant spike in PC take-up and Internet use.
It also says that employers benefit through greater productivity, while employees can improve their IT skills.
To take part in the government's consultation, which runs until the end of 2003, click here.