Susan Ball: iPads can be tax-free if you follow rules

Sadly, Santa didn’t deliver an iPad mini, but I hope my employer might take advantage of an updated version of the former home computing initiative (HCI).

Tax breaks under HCI ended in 2006, but several replacement schemes mean staff can benefit from discounts, thanks to their employer’s buying power, allowing them to pay for a computer over a fixed term, with costs deducted monthly from net salary.

But as an employer-supplied product, it is still taxed as a loan of an asset (based on 20% of its cost) and must be identified on form P11D. Also, if given to the employee outright, it is a benefit in kind at cost.

But there is another option. I spend a lot of time visiting clients and an iPad would be great for dealing with emails and may qualify for exemption under Section 316(4) of the Income Tax (Earnings and Pensions) Act 2003 as a work-related device supplied to help me perform my duties, provided my private use of the iPad is ‘not significant’.

The exemption does not apply if the employer provided the equipment knowing I wanted to use it privately, but employers are not expected to keep detailed records of private use. It helps if the employer has a policy that states any private use should be incidental and the policy will be enforced.

HM Revenue and Customs says: “Where a computer is provided because it is necessary for an employee to carry out duties of employment at home, while travelling or at work, it is highly unlikely any private use of that equipment will be significant. In these circumstances, Section 316 will apply and no tax charge will arise.”

Susan Ball is director of employment tax and advisory services at Crowe Clark Whitehill