HCI - a lovely, legal tax dodge!

TEssery · 1 September 2005 at 1:56PM

Not well publicised by the government, Home Computing Initiative is a great scheme to encourage people to get home computers. Basically, your company does a deal with an HCI provider who then offers a range of computers which you can buy tax free and with three years' interest-free credit. You're limited to, I think, £1500 product value and the item has to have a processor in it, but the HCI provider my company used (Evesham) included home entertainment systems in their offer, perfectly legitimately. My husband and I have both taken advantage of this scheme, and acquired a top of the range computer plus a PDA with sat nav. Payment is deducted from your salary, before tax, each month and works out at very little over three years. At the end of three years you can return the item or pay a nominal sum to acquire the title.

Lobby your employer if they don't already offer this - more details can be found at http://www.knowledgenetwork.gov.uk/oee/hci.nsf/0/7908C3347218272C80256E0F0041F265?OpenDocument

brantwood150 · 1 September 2005 at 5:41PM

I think you'll find that, under these schemes, the computer equipment is only loaned to employees in return for a salary sacrifice, rather than the employee actually buying them.

The tax break for employer provided computers only applies if they are loaned. You are required to return the equipment to your employer at them end of the three years.

Of course, your employer is free to sell the computer to you at the end of the agreement but, if this is done at anything less than the market value of the PC at that time, you would be taxable on the difference between the price you pay and the market value.

Still, they are very popular schemes and my employer offers it as an option.

Joe_Bloggs · 1 September 2005 at 6:43PM

You can get a bicycle this way too. This is called 'The cycle to work initiative'. Unfortunately I can't find any links towards it that work at present.
J_B.

bootman · 1 September 2005 at 6:57PM

I could do with a new bike. I work close to home and drive I would be interested in hearing about this scheme if anyone knows.

Maisie · 1 September 2005 at 7:40PM

I started a thread about the bike scheme. I think I called it 'Half price bikes courtesy of Gordon Brown.. Yes! '

I go the information from news@thisismoney.co.uk Hope you can find it.

Maisie

Might help you to find it.

kingarhu · 1 September 2005 at 7:46PM

brantwood150 wrote:

The tax break for employer provided computers only applies if they are loaned. You are required to return the equipment to your employer at them end of the three years.
Of course, your employer is free to sell the computer to you at the end of the agreement but, if this is done at anything less than the market value of the PC at that time, you would be taxable on the difference between the price you pay and the market value.

Surely the second hand value of most computers after three years (given the speed of improvements and price drops) would be approximately zilch?

pin · 1 September 2005 at 8:40PM

Good in principle, however have you looked at the HCI computers that have been offered?

We recently gave legal advice on one of our clients re the HCI scheme. The client is a very, very large employer. They said regardless of the publicity surrounding the scheme (quite a bit done by them to promote it) the take up was in the hundreds (company employs about 100,000 people world wide).

They said part of the problem was the computers on offer actually worked out more expensive than what you could buy on the "open" market.

Also the fact that the computers were loaned meant that any any self upgrades could invalidate the loan agreement.

BFG_2 · 1 September 2005 at 11:17PM

kingarhu wrote:

Surely the second hand value of most computers after three years (given the speed of improvements and price drops) would be approximately zilch?

True, but even if it's not I THINK I read somewhere there would be no BIK charge.

sertav · 2 September 2005 at 12:42AM

I came across this article in the Guardian. Very interesting reading...

Especially this bit:

The employer provides a phone for the employee and pays his mobile phone bills, but then claws back the cost of the phone and the calls from the employee's earnings. The clawback comes from gross earnings, before deductions, so the employee saves on tax and NI and the employer saves on NI, or passes the saving on as a pay rise.

The beauty of the scheme is that the employee does not have to use the phone for work and can extend the benefit to his family, as it allows him to have two phones for himself and a further three for family members - a number agreed with the Revenue.

As it happens, I'm seeing a Revenue advisor from my local Business Support Team and I'll take the opportunity to clarify a few things...

isasmurf · 2 September 2005 at 7:53PM

sertav, you may be interested in HMRC's guide to Salary Sacrifice schemes.
http://www.hmrc.gov.uk/specialist/salary_sacrifice.htm

HCI - a lovely, legal tax dodge!

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