Employers have been left disappointed and frustrated by the government’s decision to remove the tax benefits linked to home computing initiatives (HCI), while an industry built on the back of the benefit has been left in tatters.
The plan to scrap HCI from 6 April was outlined in the background information accompanying Gordon Brown’s Budget statement.
The Chancellor also made changes to tax-free mobile phones. Employees will now only be allowed one tax-free mobile phone for private use.
Irfan Hamid, head of UK business development at the Carphone Warehouse, said the company had planned to launch an HCI scheme in the next few weeks. "We are pretty gutted. We thought this would be a great benefit for our employees," he added.
A spokeswoman from the benefits department at media firm Emap said: "We were surprised because there has been no consultation [over the closure]. Our HCI [scheme] has been fairly popular, people have been keen to join it."
Andy Lister, director at employee benefits provider Grass Roots, said: "It’s a bit of a bombshell. We are pretty upset about the short notice of this."
Bill Kirwan, a partner at PricewaterhouseCoopers, added: "This is a big surprise. There will be a lot of HCI providers who are going to have to rethink their business plan."
The move could also lead to redundancies among HCI providers, which are mounting a campaign against the changes.
A HM Treasury spokesmanconfirmed that people already in schemes, or who have signed up to plans but whose computers will not be delivered until after 6 April, will not be affected for the duration of the arrangement.
"We considered that [HCI] had served its purpose. It led to a very large increase in the number of employees who are now IT literate and that was always our objective," he said.
The spokesman added that the mobile phone changes had been made to stop staff taking telephones for friends and family.
The Chancellor’s decision could also cause embarrassment for some government departments. A Department for Work and Pensions spokeswoman confirmed that the department had recently put out a tender for the launch of its own HCI scheme.
She said it would now be contacting the providers that had responded to explain that its plans are "under review".