Chancellor to reconsider tax-relief ban

The Treasury will consider plans that encourage employees to acquire IT skills after the CBI told Gordon Brown it opposed the abolition of a tax break that helped employees to buy PCs.

The employers’ organisation wrote to Brown after his 2006 budget to protest at the abolition of tax relief on loans given by employers to staff to help them buy computers for home use.

The employee perk, know as the Home Computer Initiative, which the Treasury thought was being abused, was abolished on 6 April.

CBI chief, Sir Digby Jones, said: “I am heartened by the Chancellor’s response to our complaint. He said that if business can go to the Treasury with a plan that gets rid of the abuse, he will be receptive to a scheme that continues to equip the nation for international competitiveness.”

The Treasury said: “The chancellor has made clear to business that he wants to work with them over the coming months on new programmes free from abuse.”

The scheme was scrapped as the Treasury felt it was being abused by well-paid employees as a cheap way to upgrade their laptops, while some employers were giving staff loans to buy PCs in lieu of pay. As the cost of buying kit was classified as a loan, it also attracted tax relief.

The Treasury said the decision to axe the scheme was justified as its first priority “must always be to protect taxpayers’ money and stop any abuse at the earliest opportunity”.

From 6 April, employees using loaned IT equipment at home for personal use may have to pay up to £205 a year in tax.

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