There aren’t many benefits that will appeal to the whole workforce. But technology products, offered through a flexible or voluntary benefits scheme via a salary sacrifice arrangement, are likely to appeal to everyone at some point. After all, most people today own a mobile phone, tablet or laptop.
So, why haven’t more employers implemented this type of scheme? It may be that they have concerns over administration, savings or simply do not have the time.
They may even recall the former home computer initiative (HCI) and the huge demand this generated. Nearly 10 years on from HCI, technology schemes are becoming popular again, driven by huge demand for devices, significant employer and employee savings and the ability for employees to pay back from salary over two years.
How does this work and what are the savings?
Home technology scheme
A home technology scheme provides a range of internet-enabled devices, including tablets, computers and smart televisions.
Employees are able to make savings of up to 26% on income tax and national insurance (NI) as a result of the salary sacrifice arrangement. After two years, the employee has the option to keep or return the product(s) with the full income tax charge only incurred if the equipment is kept at the end of the benefit period.
On returning the item at the end of the two-year period, the employee is able to recognise the recycling value of the returned item to get a substantial discount on a new device when re-joining the scheme.
Mobile phone scheme
Personal mobile phones and airtime contracts can be provided as a tax-free benefit under long-standing legislation that was revised by HM Revenue and Customs in 2012. Employees can choose from a wide range of phones, including the new iPhone 6.
Employees who already have business phones can also still take part. Higher-rate taxpayers can save 42% off the total price of a new handset with a two year contract. In addition, employers save on class 1A NI contributions on the total amount of salary sacrificed.
Can this support a bring-your-own-device (BYOD) model?
Organisations can utilise a technology benefits platform to reduce capital expenditure on IT in the workplace. Routinely called BYOD, this initiative is one where staff sign up to choose a phone, tablet or laptop from a range of products to use as a single device both in the home and at work. The scheme enables employers to offer staff their preferred device at a significantly reduced cost due to employer contribution, while, at the same time, reducing internal IT expenditure.
Where once employees would use a MacBook in the home and perhaps an older and less powerful laptop at work, the offer to choose one piece of equipment for work and home for a very small outlay is more popular than it might first seem.
Many staff are already allowed to use workplace PCs for some personal usage. A clear organisational BYOD policy supported by the right IT infrastructure can improve employees’ work-life balance and help to drive up morale.
Consumer credit licence
In September 2014, the Financial Conduct Authority (FCA) confirmed that where an employer offers technology benefits to employees via a salary sacrifice arrangement this does not constitute a regulated consumer hire. It had initially put this forward in May this year. This means a Consumer Credit Licence is not required to run the scheme.
Clive Farrow is employee benefits consultant at Employee Choice
