The Government has recently set up ‘The Home Computing Initiative Advisory Board’ to encourage employers to provide tax-advantaged home computing schemes. David Chandler of Computers for Staff explains how providing such a benefit works and the advantages for both employers and employees.
In all of the talk about tax rises since 1997, increased employment costs and the growing number of regulations forced on business, one very imaginative benefit that the Government has introduced has been largely ignored.
In his 1999 Finance Act, the Chancellor of the Exchequer included a clause that has gone largely unnoticed in the four years since. The Government’s often-stated aim since coming to power has been to make computers as widely available as possible to the population at large. Statements such as “computers for the many not the few” and “bridging the digital divide” proliferated, but it was in 1999 that the Chancellor did something to back up the rhetoric.
So what did he do?
Well, put simply, he enabled employers to offer their employees the opportunity to acquire computers for use in the home, by them and their families. In order to encourage employers and employees to take advantage of this opportunity, he made it financially attractive. An employee who decides to acquire a computer can fund that acquisition via process called “salary sacrifice”. (This payment vehicle is already used for childcare vouchers). The legislation allows an individual to opt to forego up to £2500 of his or her gross salary over a set period (up to 5 years), and to use that money to contribute towards cost of the computer. As long as the limit is not exceeded there are no P11D implications.
Because the employee does not have to pay income tax and National Insurance on that £2500, the practical effect is the computer has been acquired tax free. The employer benefits in that there is an immediate reduction in employment costs as no employers’ National Insurance contribution is payable on the part of the salary that the employee has agreed to sacrifice. For larger employers, the savings can run into hundreds of thousands of pounds, but even for smaller organisations they can be significant.
To back up the financial incentives to both employees and employer, many other benefits can be identified. Among them are:
- An increase in the IT skill levels of the workforce.
- An additional and very effective method of communicating with staff at home becomes available.
- Training can be delivered to staff at home.
Despite the advantages to both parties, take-up of the benefit has, so far been very disappointing. There are several reasons for this, chief among them being that having introduced the legislation, the Government expected the attractiveness of the benefit to be so obvious to everybody that they did not set about actively promoting it. So a significant proportion of employers still don’t know that the benefit exists.
The second major reason for the low rate of take-up is the reluctance of many employers to offer the benefit to their employees, fearing that to do so would result in a huge increase in their administrative workload. They also fear that their IT departments would be deluged with support calls from the workforce as they struggled to try and get their newly acquired computers properly installed and working.
The Home Computing Initiative Advisory Board
In an effort to address the first of these issues, the Government has set up ‘The Home Computing Initiative Advisory Board’. This body is to explore ways in which knowledge of the benefit can be more widely disseminated, and once those ways have been identified, to see that they are acted upon. The Advisory Board itself consists of representatives from various government departments such as the DTI , the DfES, the CBI, the TUC, the IoD, and the Federation of Small Businesses. Also on the Board are various companies such as Computers For Staff that have come into existence specifically to help organisations that wish to offer the benefit to their employees.
The Advisory Board has so far only met on three occasions and is still very much at the stage of deliberating about how best to promote the benefit to the world at large. It has been suggested that the TUC, who are very enthusiastic about the benefit, will leaflet their entire membership and this may well prompt their members to lobby their employers about it. In the meantime, companies such as Computers For Staff will continue to address the second of the problems mentioned above, i.e. employers’ concerns about the work involved in offering the benefit to their staff.
How do you set up a scheme?
It is not simply a case of saying to the workforce “do you want a cheap computer?” In order for it to be worthwhile, the organisation has to run a properly thought out scheme to offer the benefit to their employees. Thought has to be given to deciding on eligibility criteria, i.e. who is the benefit going to be offered to, for example all of the workforce or only those with a certain minimum amount of service? The scheme then has to be properly promoted and the benefit explained to the workforce. Once the scheme has been launched it needs to be properly administered so that when employees start to sign up, their computers are delivered to their homes on time, that somebody turns up at an agreed time to install the machines with all of the proper software, and set up Internet access and e-mail addresses, etc. Thereafter, there has to be support for those machines to ensure that they are properly maintained, that things such as anti-virus and Internet filtering software are constantly up-dated, and that an at-home repair service is in place. Crucially, we offer this proposition to employers at no cost.
Companies such as Computers for Staff and other members of The Home Computing Initiative Advisory Board take the load involved in running home-computing schemes off employers, so that offering the benefit to their employees is not too much work. The financial benefits accrue to the employer and employees alike.