Before 6 April 2006 the first £500 of the benefit in kind charge arising on the private use of employer provided computer equipment was exempt from tax. As the ‘annual value’ benefit in kind on the use of an asset is calculated as 20% of the market value of the asset when first used to provide the benefit, this exemption generally covered any potential benefit in kind.

The exemption was removed from 6 April 2006 and a computer provided after that date is therefore potentially chargeable to benefits in kind using the annual value calculation. However, tax legislation exempts any benefit if there is no 'significant private use'.

HMRC have recently revised the Employment Income Manual to give guidance on 'not significant'. An extract from the guidance states that:

'…where

• the employer's policy about private use is clearly stated to the employees and sets out the circumstances in which private use may be made; and
• any decision of the employer not to recover the costs of private use is a commercial decision, for example based on the impractical nature of doing so, rather than a desire to reward the employee, ‘

then HMRC should accept that the test is met.

This extract makes is clear that businesses need a written to policy to avoid the possibility of a benefit arising. Please do get in touch if you need any help in drafting a policy.

Internet Link:

HMRC manual