Home Computer Initiative

Home Computer Initiative

Didn't find your answer?

Reading the budget text it looks like the Home Computer Initiative has been shut down.

Does anyone have any comments on this?

How is this likely to effect people already loaned computers through the scheme?

James
James Snowsill

Replies (17)

Please login or register to join the discussion.

avatar
By jonstanton
22nd Mar 2006 18:00

Yes - that's right
James,

As it stands Budget Note 30 confirms that the tax exemption used for HCI schemes is to be withdrawn from April 6 2006.

We have spoken to the HMRC Employers helpline for clarification and been told the following:

All machines loaned to employees before April 6 will be allowable. Any new computers loaned after April 6 will be treated as Benefits in Kind.

So current employees taking part will be OK, but no new employees will be able to take part.

So unless something changes HCI will be finished.

Jon Stanton
Peters Elworthy & Moore

Thanks (0)
John Stokdyk, AccountingWEB head of insight
By John Stokdyk
22nd Mar 2006 18:12

Big story - Thank you gents!
Once again, the AccountingWEB Budget monitors come up trumps. I've been occupied elsewhere, but this news will be a kick in the teeth for the PC industry.

I'll follow up for Thurday's IT Zone newswire and see if I can get any further information.

John Stokdyk
Technology editor
AccountingWEB.co.uk

Thanks (0)
John Stokdyk, AccountingWEB head of insight
By John Stokdyk
22nd Mar 2006 19:03

Unofficial confirmation
Eb, James and Jon are correct in their initial interpretations, according to what I was told by an HMRC spokeswoman, who said existing loans would not be affected.

Granted, this hardly represents a solid legal confirmation but she referred to the two-week window as a way of mitigating the effect of the measure and sounded very encouraging about the idea of people haring off to take advantage of HCI before the scheme ends.

John Stokdyk
Technology editor
AccountingWEB.co.uk

Thanks (0)
avatar
By AnonymousUser
23rd Mar 2006 09:52

Conflicting information from HMRC
I have spoken to HMRC today and what they have said is that any equipment loaned to employees will be taxable in 2006/07 irrespective of when any agreements were entered into!!! This conflicts the advice that was given to Jon yesterday.

Thanks (0)
avatar
By AnonymousUser
23rd Mar 2006 11:36

definition of made available
We have over 100 signed hire agreements (therefore dated before the 6th April) and the order ready to go in. Will this mean they are allowed in under the old rules or the new rules?

Thanks (0)
avatar
By Dave Collier
23rd Mar 2006 11:21

Surely someone at HMRC knows!
Surely there was someone senior at HMRC who can give the definitive answer to this - it is somewhat important to any of our staff who wants to buy a PC before 6 April 2006. What do we advise them for goodness sake!

Thanks (0)
avatar
By ACDWebb
23rd Mar 2006 15:10

BN30
only refers to phones & computers, not bicycles

Thanks (0)
avatar
By AnonymousUser
23rd Mar 2006 15:59

'Significant' private use
We've confirmed again with HMRC press office and had a reply back at 11.47. They said they would get a clear message to staff about the exemption continuing for pre 6 April schemes, which it appears has now been done. So if you haven't got the scheme in place already, do it now!

They've also given us the following about private use:

'No tax is due on computers provided for business use. A tax charge may arise where significant private use is made of a computer provided for business use.

The value of the computer and the extent of the private use will be used to determine the cash equivalent of the benefit in kind in respect of the private use.'

Which isn't terribly practical, but we can at least see what they are thinking.

Mike Truman
Editor, Taxation magazine

Thanks (0)
avatar
By AnonymousUser
23rd Mar 2006 12:44

Are all HCI Schemes scapped.
I have read BN 30 mentioned by Jon but I cannot see that this specifically covers more complex (sic) HCI schemes such as those involving a 3 year Hire Agreement for computer equipment etc. coupled with a salary sacrifice by employees.

However, I am sure that it does, especially as the Chancellor didn't mention axing HCI in his Budget speech. Why would he wish to draw attention to such a sucessful scheme that has cost the Treasury £300m!

Larry

Thanks (0)
avatar
By AnonymousUser
23rd Mar 2006 11:19

Written confirmation
Thanks to Paula for alerting me to this q&a. We got written confirmation last night that existing loans continue to be exempt as follows:

'Anybody who has a computer made available for private use prior to the changes announced taking effect (sic) on 6 April 2006 whether or not through an HCI scheme will not be affected by the changes. However all new agreements to loan computer equipment that take effect on or after 6 April 2006 will be affected and will need to take account of this change'.

Couple of quesiton left open - if the agreement was open ended, does it allow the computer to be replaced and still qualify for exemption? And if not, at what point is the computer not the same as the one originally supplied? 'I still use my great-grandfather's axe. It has had fourteen new blades and six new handles, but it is still the axe of my great-grandfather...'

Mike

Thanks (0)
avatar
By AnonymousUser
24th Mar 2006 07:48

How do you define date of commencement?
If it appears impractical to obtain physical delivery of the computer until after 05 April 2006, is it sufficient to enter into an unconditional agreement/contract/salary sacrifice etc and place an order for the computer before that date, in order to escape the BIK restriction?

Thanks (0)
avatar
By taxinfo
24th Mar 2006 16:50

gives you confidence (not)...
Don't you just love it. The Chancellor removes the scheme when, at the same time, the DTI are promoting it.

Classic "joined up government thinking".

Not.

Thanks (0)
avatar
By David Heaton
24th Mar 2006 17:05

'made available'?
We haven't seen the proposed change to section 320 yet, so we don't (and probably won't before 6 April) know whether having a loan agreement in place will be enough.

You're currently not in the exemption unless equipment is 'made available to the employee'. Entering into a loan agreement without actually making a PC available before 6 April would not obviously qualify. And in view of the inconsistent responses of the helpline over the last day or two, I think I'll tell my clients to ensure the PC is in place with the loan.

Thanks (0)
avatar
By jonstanton
24th Mar 2006 19:26

Existing scheme members are OK
http://www.hmrc.gov.uk/news/home-computer.htm

The above link clarifies the position for existing schemes and partly delivered schemes.

Existing scheme members will benefit from the tax exemption, as will anyone with an agreement in place - whether or not the equipment has actually been delivered.

Jon Stanton
Peters Elworthy & Moore
www.pem.co.uk

Thanks (0)
avatar
By David Heaton
23rd Mar 2006 09:55

Confirmation from the helpline?
I spoke to the Employer Helpline this morning to clarify specifically the point on existing PC loans and was told that the exemption will not apply after 6 April.

The FT and the Guardian's budget analysis say that existing loans will be protected, but don't say how they know.

Thanks (0)
avatar
By Dave Collier
23rd Mar 2006 14:56

Bicycles?
Does anyone know if this change will affect the tax exemption on loans for cycles the cycle-to-work scheme which also work in the same way as the HCI?

Thanks (0)
avatar
By AnonymousUser
23rd Mar 2006 13:55

BN30
HCIs are enabled by the Government's tax exemption on loaned computers. BN 30 gives details of the removal of this exemption.

Thanks (0)