The Office of Fair Trading announced on Tuesday that employers participating in a Home Computing Initiative (HCI) scheme would be able to take advantage of a new group consumer credit licence that would help employers and employees gain tax benefits.

HCI schemes were launched in 1999, and allow employers to loan computer equipment to their staff free of any income tax liability. The idea is that employees benefit from gaining computer access, employers benefit by having a more skilled employee, while the Government benefits by having a more skilled workforce.

Under the Government's original scheme, employers were allowed to implement a tax exempt loan scheme for computer equipment for their employees to use at home. The employee would agree to accept a lower amount of salary and would take the loaned computer – a tax and National Insurance Contribution free benefit – as part of his wages.

The employer did not need to pay NICs in respect of that part of the employee's salary that had been replaced by the computer benefit.

At least, that was the plan. Unfortunately, the scheme was buried so deep within tax regulations that very few people knew it existed. The scheme is therefore to be re-launched on Monday, but in a simpler form.

On Tuesday the OFT announced that the agreements between employers and employees participating in the schemes will be consumer hire agreements as regulated by the Consumer Credit Act 1974.

This means that employers do not need to apply for a Consumer Credit licence themselves, and one hurdle in the road to implementing their HCI scheme is therefore avoided. Employers will be covered by the group licence so long as they are undertaking activities within its terms.

Penny Boys, OFT Executive Director, said:

"The group licence enables employers to provide home computing benefits to staff without requiring them to apply individually for a consumer credit licence for this purpose."

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