Here’s Gordon Brown’s surprise announcement, given no prominence whatsoever in the 310-page budget report:
5.106 Many employees have benefited from the tax exemption to get a computer into their homes, but the Government now wishes to focus support on groups with the poorest access to technology, to meet the goals set out in the Digital Strategy. As a result, the Govenment has decided to remove the current tax exemptions for employer-provided computer equipment, from 6 April 2006. The tax exemption for mobile phones is also being refocused to ensure it delivers on its objectives.
With the scrapping of the HCI scheme, many third-party facilitator companies – set-up specifically to market the tax-efficient but bureaucratically burdensome employee benefit schemes – will have to reconfigure their businesses after April 6th. Those who are HCI-only will be dust, those with childcare voucher schemes and ‘Cycle to Work’ will likely ramp up their bike schemes.
The HCI sector knew the scheme was under review but it was assumed any news would be positive news. For instance, it was thought teachers would become eligible for HCI.
A support-HCI website says: "Many in the industry are angry at how little notice of the change they were given. Despite the existence of an industry body (The HCI Alliance) which regularly reports to the DTI and HM Treasury, there was no prior consultation. What’s worse, by scrapping the exemption in just 10 days, nobody in the HCI industry has time to react to the change."
Booost, the first tax-free bicycle buying scheme, is run by Computers for Staff of Arundel. Booost MD Richard Chandler told BikeBiz.com that the news was like a "grenade going off". It was a "total surprise."
He’s now faced with refocussing the business:
"Booost will become bigger because of this," he said.
Gary Cooper of Cyclescheme, a bike-specific ‘Cycle to Work’ facilitator, said:
‘We’ve scoured the budget report and saw no mention of bikes. Let’s face it, the government would have got a pasting if they’d scrapped ‘Cycle to Work’. Tory leader David Cameron is a cyclist and the last thing the government wants to be seen doing is scrapping Green Transport Plan initiatives.
"There are 100+ HCI companies out there, all of whom must be reeling this morning. It could be a good thing for ‘Cycle to Work’ because those companies that were about to set-up HCI and ‘Cycle to Work’ schemes will now put more effort into the cycling scheme."