Treasury quietens work email tax talk

The Treasury has dampened speculation that companies and staff could be taxed on use of work computers for personal purposes in the wake of the scrapping of the Home Computing Initiative (HCI).

An article in Taxation magazine said that under terms of the Finance Bill, the Inland Revenue could demand tax and National Insurance payments from employees and employers if computers are used for non-work purposes because they would be interpreted as benefits in kind.

The article’s author, chair of personal taxes at the Chartered Institute of Taxation, Anne Redston, told IT Week: “The technical position is that there‘s definitely a problem and it would be difficult for employers and employees to measure significant non-work usage. It would be a bureaucratic nightmare. I hope they will take the pragmatic view that this is impossible.”

The Treasury said it had never intended that office computers should be liable, only those loaned by employers for use at home and even then only in cases of abuse.

“The loaned computer will not be treated as a benefit in kind if the personal use is insignificant,” a spokesman said. “If you need it to do your work, no matter what your personal use is, [Revenue inspectors] are very unlikely to treat it as benefit in kind.”
PCs loaned through the HCI scheme will not be affected, the Treasury said.

Separately, the government said that paymaster general Dawn Primarolo will set up “a dedicated digital inclusion team to tackle social inclusion”. The plan is to replace the HCI with a policy that helps the most disadvantaged people gain access to computers and computer skills.