The home computing initiative (HCI) was a government programme first introduced in 1999 to improve the IT skills of employees and grow the number of internet users. It allowed employers to provide personal computers and peripherals to their staff without the benefit being taxed.
In April 2006, HM Revenue and Customs (HMRC) announced the removal of the initiative without any consultation because of claims that higher-rate taxpayers were abusing the scheme and that computers had become more affordable and relatively well used. Most people had some access to computers and so the purpose of the scheme had been achieved.
Since the abolition of HCI, there are currently no government schemes in place that legislate for the provision of computers and technical equipment to employees by their employers. However, the Employment Income Manual (EIM) 21699 - Particular benefits: computers: partial exemption: abolished 2006/07 states: ”For arrangements entered into on or after 6 April 2006 to provide a computer to an employee for private use, the employment income tax treatment is the same as for any asset provided by an employer for private use.”
Tax treatment
In other words, the provision of IT equipment can be treated as a benefit in kind (BIK), and this is the basis for the current crop of computer schemes.
Scheme administration is very simple and only requires the employer to complete what is a familiar process to most. Benefits in kind do not attract employees’ class 1 national insurance contributions (NICs). They are, however, subject to class 1A NICs, which are payable by the employer. The employer initially makes a class 1A NIC saving via an employee reducing their salary, but then repays the same amount via a P11D(b) charge. As such, the employer does not incur any cost in providing the scheme.
What are the benefits?
Firstly, employees can access a wide range of IT equipment, including highly desirable Apple products. Employee savings are available on NI of up to 12% for basic-rate and 2% for higher- and additional-rate taxpayers. There is the convenience of direct payments from salary spread over 12, 24 or 36 months. Payments from salary are interest-free and there are no credit checks. The organisation will enhance its corporate social responsibility (CSR) policy and improve how it is perceived as an employer. And a scheme can also help to increase staff loyalty and improve IT skills with minimal administration.
In 2011, when Computingscheme helped launch Sky’s first scheme, we were overwhelmed by its staggering 43% uptake and have realised since that there is latent demand among employees for the latest technology.
Truly engaging employee benefits are few and far between and computer salary sacrifice enables employers to offer staff something different and universally relevant.
This benefit can provide the means for employers to make IT hardware engagement and usage more accessible and attractive to employees, while promoting improved computer literacy, leading to greater opportunity to expand the mobile and home-based workforce.
Santander case study
“We introduced a computer scheme when we refreshed the whole of our flexible benefits offering at the end of 2012. It has been a hugely popular and valued benefit with our staff, enabling them to save money by taking advantage of the NI savings available as well as spreading the cost over two years, interest-free. There is a great range of items available and the products are always up to date.
”In the first month of the scheme, nearly 1,300 employees took advantage of it and, after 14 months, this has climbed to more than 3,650 staff, which is 13% of our UK workforce. Of the 18 benefits included in our flexible benefits offering, the computer scheme is the third most popular, after holiday trading and private medical insurance.”
Stephen Gambles. senior reward manager, Santander UK
Daniel Gillborn is director, Computingscheme by Grass Roots Group
