Home Computing Explained

We have just run the scheme for a sixth time and once again

our employees have been enthusiastic participants

with almost 1,000 taking part

NHS Lanarkshire

www.lets-connect.com

The Home Computing Scheme

The provision of a Desktop or Notebook computer for home
use, under the Governments Home Computing Initiative,
had become one of the most popular non-cash benefits
that an employer could offer to their staff. Following
the discontinuance of the Benefit in Kind tax exemption
for HCI (Home Computing Initiative) schemes in 2006,
Lets Connect, looked closely at the merits of employers
continuing to offer employees the opportunity to obtain the
use of computers at home.
We had received extensive feedback from existing HCI
clients which highlighted that the main benefit of the
scheme, as perceived by many employees, was not just the
tax savings, but also the convenience of acquiring one of a
pre-selected range of computers from a major brand. Paying
for this benefit through their salary without the need for a
rigorous credit check, payment of a deposit or high-rate of
interest was especially attractive to most employees.

We looked at how computers for the home could be offered

in a way that continued to give the employee good value for
money in a convenient, easily affordable manner via their
employer. We wanted to offer a scheme that still provided
good savings to the employee, and sufficient savings for the
employer to cover the cost of running the scheme. We also
wanted to as much as possible imitate both the processes
and tenets of the original Government-backed scheme.
The Home Computing Scheme from Lets Connect has, we
believe, achieved these goals, and our growing number
of clients in both the public and private sectors bears
testament to this.

Salary Sacrifice
Salary Sacrifice as a means of providing certain benefits to
employees has not been affected by the legislation change
to HCI. This means that although the Benefit in Kind tax
exemption no longer exists, employers can still provide
employees with a computer of their choice in the same way.
Through the Salary Sacrifice mechanism, the employee would
still see the same Tax and NI savings, but the Benefit in Kind
tax charge would be recovered through a change to the
employees tax code. The employer would also see a reduction
of 12.8% through their NI contribution based on the reduced
salary level but this would be partially off-set by Class 1A NI
Contributions on the employees Benefit in Kind tax charge.

How the Savings are made in the

Home Computing Scheme?
A computer or any other internet enabled device provided by
an employer to an employee, is considered by HM Revenue
& Customs to be a form of income which they refer to as
Benefit in Kind. This Benefit in Kind is taxed at a rate of 20%
per annum of the original value of the asset when it was first
supplied to the employee, and excludes any interest paid on a
loan to acquire the asset.

Employee

Employer

If the value of the computer were 1000 and the Salary

Sacrifice arrangements were set up to recover the employers
outlay over three years, the value for Benefit in Kind purposes
would be deemed as being 200 per annum.

On the same basis, the employer would have a Class 1A NICS

liability on the employees 200 Benefit in Kind per annum
over three years. The liability would only apply to 600 tax
charge to the employee although all the monies (1000) will
have been recovered within three years.

This would mean that the Benefit in Kind liability would be

calculated on 200 (20% of the value of a 1000 computer).
As the schemes run for three years, the employee would only
be charged tax on 600 (3 years at 200 p.a.).

Operational Considerations
The computers are treated as assets in order to enjoy the tax
advantage and there will be a requirement for the Benefit in
Kind to be reported to the relevant tax offices. The Benefit
in Kind liability will be collected through a change in the
employees Tax Code and this will be made clear in all the
marketing materials.
We will liaise with Payroll during the project phase to agree
the best method of transferring information to the respective
Tax Office relating to the Benefit in Kind tax charges on
behalf of the employees who join the scheme.
Lets Connect provides a fully-managed service, tailored to the clients needs, and offers guidance where applicable on:

EHA - approved Hire Agreement, regulated under the Consumer Credit Act
OFT - where applicable we can assist with obtaining this
Funding - where external finance is preferred we can liaise on your behalf with a panel of Finance Houses and ensure best
value for all parties

Payroll System Changes - Salary Sacrifice remains in place for period of programme. Lets Connect will agree with Payroll
during the project phase the method of Data Transfer to facilitate Salary Sacrifice reductions and tax code adjustment

VAT - the scheme will be structured to ensure compliance with current VAT treatment of Salary sacrifice schemes
BIK treatment
End of Scheme at the end of the scheme the employer disposes of their interest in the asset back to Lets Connect and there
is no further Benefit in Kind liability for the employee.

www.lets-connect.com

Summary
The Home Computing and Home Technology Schemes from
Lets Connect are growing in popularity. Scheme design,
implementation and support are provided by Lets Connect,
resulting in minimal administrative overhead for our clients.
With participation rates currently ranging from 811% of
eligible employees we are confident that your employees will
appreciate the inclusion of this specific benefit in your overall
employee reward programmes.

Call Lets Connect on 08444 821 865

or email marketing@lets-connect.com

Your leading Home Technology benefits provider

www.lets-connect.com