IR6

9 March 1999

TAX BOOST TO WIDEN COMPUTER USE

A tax boost to encourage wider computer use and computer skills among
employees was announced by the Chancellor today, as part of a package
of measures to increase computer access throughout the community.

The Chancellor said

  "We hope this new measure will encourage businesses to loan
  computers to their employees and that it will be as successful as a
  similar scheme developed in Sweden, where household computer use
  increased dramatically as a result. There are real benefits to
  businesses, employees and the wider community from increasing
  access to computers."

From 6 April 1999 employees will be able to take up the loan of a
computer from their employer without being faced with a tax charge.

DETAILS

1. The Chancellor is removing the employee benefits tax charge on
computers lent by employers to employees for up to #2,000 value of
computer equipment. This exemption will help extend computer access
and experience throughout the employed workforce. In Sweden, the
recent introduction of a similar exemption has encouraged a
noticeable increase in the provision of computers to employees.

2. The exemption will be reviewed after a period in the light of the
spread of computer access and of technological developments.

3. The cost to the Exchequer of this exemption will be about #5
million in 1999-2000.

NOTES FOR EDITORS

1. Employees earning over #8,500 are generally taxable on benefits in
kind which they receive by reason of their employment. So where an
employer makes an asset freely available to an employee, for example
a computer, which the employee can use for private purposes at home,
an income tax charge will arise.

2. The annual amount of the charge will generally be 20% of the
asset's market value, plus any related expenses which the employer
meets. So where a computer is provided free to an employee by an
employer for his private use and has a market value of #1,800, and
where the employer also pays #80 a year for breakdown/repairs
insurance, the income tax charge on the benefit would be on #440
(#1,800 x 20%,+ #80).

3. The Chancellor's proposal will remove the tax charge in such
circumstances for up to #2,000 of computer equipment benefit provided
to an employee. The normal taxing rules will apply on the value of
the benefit in excess of #2,000; and the exemption will not be given
if the equipment is confined to directors and senior staff.

INLAND REVENUE PRESS OFFICE
Media enquiries to:           0171 438 6692/6706/7327
(Out of hours: 0860 359544)
Non-media enquiries to:       0171 438 6420/6425
(Office hours only)
Inland Revenue information is on the Internet:
www.inlandrevenue.gov.uk

# = pounds sterling