Budget 2006 - Death of Home Computing Initiative?

  tammer 19:44 22 Mar 06
Locked

I don't know if many folk have cottoned on to this yet but it seems the Chancellor has given the Home Computing Initiative a great big kick in the 'nads.

Has anyone else spotted this and what do people think of this scandalous tax charge?

  tammer 19:45 22 Mar 06

Apologies, I should have attached the link to the news article:

click here

  rmcqua 20:59 22 Mar 06

tammer:
I guess you referring to the abolition of tax relief on computers loaned to employees? I'm sure it will create a lot of discussion and grumbles but, a bit like company cars, I think that most prospective recipients would probably rather have one and incur the tax burden rather than not have the offer.
(Yes, I do get a laptop with my job but it's very old, slow, not worth much - honest!)

  The Regster 18:44 23 Mar 06

It's not just loaned PC's. It also looks like the end of the tax benefits for the Home Computing Initiative.

Many employers offered these schemes as a benefit to their employees. You 'sacrifice' your salary at source (i.e. fully free of tax and NI) in return for a new PC (or voucher to buy one from a selected store). This meant that the employee could save nearly 50% (if a higher rate tax payer). In addition, the employer saves because they don't have to make NI contributions on the sacrificed amount - for big employers this could be a significant saving.

The schemes are (imho) really good value as everyone except the chancellor wins. It seems he spotted this and put the kybosh on new agreements.

If yu have an option to participate in an HCI scheme that can be exercised before April 6, it would be worth getting some advice as it could be your last chance to participate.

I am not sure of the status of those schemes that are about to launch - there will be plenty as they take some time to organise. It could be that they lose their tax break. If anyone has any news please post.

The HCI section of the DTI website click here has not be updated, nor the Home Computing Alliance site click here

It's really rather sad that one part of Government works so hard to promote (and administer) a scheme that another part of government shuts down simultaneously.

  oresome 19:31 23 Mar 06

"The schemes are (imho) really good value as everyone except the chancellor wins"

As the proceeds of taxation benefit society as a whole, it could be argued that the scheme benefitted the employer and employee at the expense of everyone else.

  Minkey1 20:19 23 Mar 06

or alternatively, as one of the avowed purposes of the scheme was to aid computer literacy, then that benefits society as a whole ?

  rmcqua 20:20 23 Mar 06

The Regster - thanks for the info, the whole thing seems a bit clearer now. I think I'll give mine back!

  pj123 18:46 24 Mar 06

My main beef with the budget is the new VED banding categories.

My car has very low CO2 emissions and would have been classed as Band C, which is now £100, saving me £70 a year. But because it is pre 2001 it doesn't come under the banding system and, in fact, has now gone up by £5 to £175.

  Strawballs 19:35 24 Mar 06

I think that it was a great scheme I have a HP Pavillion laptop through HCI which I lease and pay for salary sacrifice cost me about £6.99 PW for a Athlon 64 3200+ 80gig HD 1gig ram 15.4" wide screen DVD RW and was hoping to upgrade after three years and buy this one for £45 I have had it for a year.

  Minkey1 12:17 25 Mar 06

Just been an item in the Budget Review on R4. Apparently the rest of the Govt knew nothing about the change, and the DTI and DWP (having just announced schemes for their own staff) have had to withdraw them !

Is this the kind of joined up Govt we'll see when/if GB takes over from the Peoples PM ?!

  The Regster 13:35 25 Mar 06

The other consequence is that due to the lack of consultation with the industry, the R4 programme cited 2,000 potential job losses as a result of the collapse of HCI.

A lot of companies had developed dedicated teams to sell the schemes. They now have no purpose as of a week on Wednesday. The costs of redundancy, benefits and lost income tax as a result of these job losses will be significant. If there had been some consultation with the industry, there might have been options to redploy.

Instead, the costs could end up outweighing the increase in tax revenue. You can't help wondering about the quality of government decision making - especially as the DTi (the OWNERS of the scheme) were in the process of rolling out the benefit to their own employees. This is now likely to be scrapped. What a waste of our money.

The Treasury should be highly embarrassed. But they won't be. Good luck to those affected by the collapse. I hope they go on to better things - I wouldn't blame them if they went and took their skills overseas to a more rational and appreciative government.

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