PDA

View Full Version : oh dear: Firms face new tax on staff e-mail to friends



AtW
1st May 2006, 01:52
Firms face new tax on staff e-mail to friends
By Gabriel Rozenberg, Economics Reporter

EMPLOYERS could be forced to police their staff’s use of office computers or risk facing a punitive new stealth tax on themselves and their employees, The Times has learnt.

Tax lawyers and Opposition MPs are seeking urgent clarification of the scope of new taxes on business computer equipment, which Gordon Brown introduced without fanfare in his Budget in March.

The Treasury has played down the extent of the changes. However, the Finance Bill, to be debated in the House of Commons tomorrow, makes clear that both employers and employees will now be taxed if they use office computers for personal reasons, such as surfing the web or sending e-mails to friends, unless their personal use is “not significant”.

The new taxes are the result of Mr Brown’s controversial decision to scrap the Home Computing Initiative, a tax break that let hundreds of thousands of people buy computer equipment at cheap rates through their employers.

Under the rules that replace the scheme, office computers used in part for non-business purposes are treated as a benefit in kind, meaning that employees will have to pay income tax on them, and employers will have to pay national insurance contributions for them as well.

On a computer bought for £2,000, an employee paying higher-rate tax would face a £160 bill each year and an employer would have to pay an extra £51.20. :rollin:

Anne Redston, chairman of personal taxes for the Chartered Institute of Taxation, writing in Taxation magazine, said the result could be “a new bureaucratic burden” on employers to make sure that private use of computers was kept to an insignificant level.

It was not clear what constituted an “insignificant” use, she said. On the basis of guidance from HM Revenue & Customs (HMRC), it seemed that employers would now be required to have a clear, stated policy against widespread private use of computers, which they would have to enforce with “reasonable checks”.

An alternative reading of “significant”, used in the context of rules on company vans, was even stricter, she said, and would mean virtually every computer used would face the new charges.

David Reynolds, of the Independent Association of Accountants Information Technology Consultants, said the Treasury could collect an extra £2.2 billion over the next three years if it applied such a strict interpretation of the law.

A Treasury spokesman said: “HMRC will take a practical view of what significant private use is.”

Treasury sources suggested that the rules would not apply to computers required for office work, even if employees used them extensively for non-work purposes.

Ms Redston said that such an interpretation of the law, which exists nowhere in the legislation, would be unusual but very welcome.

The Conservatives will seek to clarify the scope of the law in debate on the Bill tomorrow. Mark Francois, the Shadow Treasury Minister, said: “Practically, it will be extremely difficult for employers to stay on the right side of tax law unless they are given clarity. The cynical interpretation is that this is a massive tax grab.”

Board Game Geek
1st May 2006, 02:30
More details here HMRC (http://www.hmrc.gov.uk/manuals/eimanual/eim21703.htm)

eg


Example 4 (exemption does not fully cover cash equivalent, computer necessary to perform duties, part private use)

A magazine publishing company employs graphic designers who do much of their work at home. They are provided with computers, scanners, colour laser printers and software with a market value of £6,000. All the employees occasionally use the equipment for private purposes and one is able to demonstrate that it is used for work 80% of the time and privately 20% of the time. At no time is the equipment used concurrently for work and private purposes. That employee pays tax on employment income as follows:

Annual value of the computer 20% of £6,000 = £1,200
Less exemption £500
Cash equivalent of benefit £700

From the cash equivalent the employee can claim a deduction in respect of the use of the benefit for performing his duties (see EIM21637 and EIM31661). The amount of that deduction is 80% of £700 = £560. The employee would therefore pay tax on a net benefit of £140.

TheMonkey
1st May 2006, 07:57
Like they'll actually be able to police that.

Can you imagine the volume of data for a small corporate they'd have to store and audit - it's completely unenforceable.

The tax is simply easier and cheaper to pay rather than to argue over. Another way of screwing people.

How would it work in my situation? I personally own all of my company's equipment and do not charge the company to use it (so if the Ltd goes under, I can still work). Do I have to pay this tax for using my own equipment privately?

Bitbucket
1st May 2006, 08:38
Looks like CUK wont be free in future

xoggoth
1st May 2006, 08:42
This is all totally absurd. Usage of computer equipment does not shorten its life since it is is usually obsolete and disposed of long before it fails, so why not make use of it rather than leave it idle and go out and buy another for private use? This is all part of Brownstuff's drive to simplify the tax system and reduce the administrative burden no doubt no doubt. The bloke is an absolute (fill in your own words here) and needs killing in the most painful long drawn out way possible.

PS TM. You can still claim capital allowances on privately owned equipment used for business. Unless that's gone too.

xoggoth
1st May 2006, 08:59
http://www.hmrc.gov.uk/manuals/eimanual/EIM36730.htm

xoggoth
1st May 2006, 09:09
Is this a Brownstuff pattern? Encourage firms to buy equipment for employees, then change the rules and tax them on it. Just like the 0% corporation tax that drew a lot of self employed/partenrships to incorporate, then put it back up. Fat ugly incompetent devious F*.

threaded
1st May 2006, 09:14
Never ascribe to malice that which is adequately explained by incompetence.

xoggoth
1st May 2006, 11:29
Both I would say. They are maliciously incompetent.

Fungus
1st May 2006, 11:55
I'd rather they were incompetently malicious. Pity they can't even get that right.

Lucifer Box
1st May 2006, 12:02
Treasury sources suggested that the rules would not apply to computers required for office work, even if employees used them extensively for non-work purposes.
I might be being a bit slow here, but isn't this a massive get out? After all, what company buys kit that isn't "required"?

privateeye
1st May 2006, 12:28
After all, what company buys kit that isn't "required"?

Most Government Departments?

Mailman
1st May 2006, 22:34
What a ******** joke!

This is bloody rubbish...imagine if companies are forced to pay this tax and the increased burden on those same companies to install monitoring software (and to then store all that data for how ever long HMRC determines)! Quite simply unworkable!

If ever a country needed a revolution...its England. Imagine if they tried to impose this kind of tax in France (where you got taxed for the private use of cows for sex)...they be in a permanent state of revolt!

But then again...the very fact this law was passed without any protests from the English just goes to show how much you guys resemble sheep! :D

Mailman

ASB
2nd May 2006, 12:28
But then again...the very fact this law was passed without any protests from the English just goes to show how much you guys resemble sheep!

The law is not passed. It is a part of the finance bill, slipped out under cover of briefing papers. There has been quite considerable noise about this potential change - as you yourself have noticed.

Of course the probability of it not ending up in the Finance Act and passed into law is probably about as high as that of me being pope by tomorrow.

By all means slag us all off as sheep - but figure out the system so your facts are straight first.... :moon:

swamp
2nd May 2006, 12:57
So long as you don't have more than £2500 worth of kit, then your personal use should be covered by the £500 exemption.

And IMO servers, training/development machines have no conceivable "personal use" anyway.

Ivor1
2nd May 2006, 14:37
When I saw that in the Metro today I had to check I had not picked up an old April 1st addition, I thought it was joke.

AlfredJPruffock
2nd May 2006, 14:49
What a ******** joke!

This is bloody rubbish...imagine if companies are forced to pay this tax and the increased burden on those same companies to install monitoring software (and to then store all that data for how ever long HMRC determines)! Quite simply unworkable!

If ever a country needed a revolution...its England. Imagine if they tried to impose this kind of tax in France (where you got taxed for the private use of cows for sex)...they be in a permanent state of revolt!

But then again...the very fact this law was passed without any protests from the English just goes to show how much you guys resemble sheep! :D

Mailman

We need more taxes to fund more millitary campagins.

As a keen advocate for British Millitary intervention around the globe Mailman surely you dont begrudge paying more for our Boys in the front line ?


Fades to Land of Hope and Glory ....

The Lone Gunman
2nd May 2006, 14:53
But then again...the very fact this law was passed without any protests from the English just goes to show how much you guys resemble sheep! :DI had been wondering just what it was that made you Kiwis so fond of the place.

Ivor1
2nd May 2006, 14:57
I had been wondering just what it was that made you Kiwis so fond of the place.

lol :rollin: :rollin:

sasguru
2nd May 2006, 15:11
I had been wondering just what it was that made you Kiwis so fond of the place.

:rollin:

The score is:
Lone Gunman 350 Postman Prat 0

Mailman
2nd May 2006, 16:18
I had been wondering just what it was that made you Kiwis so fond of the place.

I dunno but I suspect its got something to do with the ease of English women and the fact it aint that hard to get a well paying job. Sheep are of secondary importance :D

Mailman

Mailman
2nd May 2006, 16:19
By all means slag us all off as sheep - but figure out the system so your facts are straight first.... :moon:

Since when have facts had anything to do with how this country is run by your beloved government! :D

Mailman

ASB
2nd May 2006, 20:21
Since when have facts had anything to do with how this country is run by your beloved government! :D

Mailman

The only thing I would complain about with that reply is the last 3 words. They've got nowt to do with me.

DodgyAgent
2nd May 2006, 20:25
Since when have facts had anything to do with how this country is run by your beloved government! :D

Mailman

It is our government not yours. You are here earning a living by virtue of the fact that we have developed a civilised and prosperous society. In other words you are our guest. Our government may be shite but they are our govt and if you dont like them there is a ship leaving Portsmouth to take you home. I suggest you go there and ask to be clapped in irons and sent back to where you come from.

Mailman
2nd May 2006, 22:53
It is our government not yours.

Thank ***** for that! :D


virtue of the fact that we have developed a civilised and prosperous society.

BWAAAAAAHAHAHAHAAAAAAAAAA...feck, who has been listening to too much Gordo Brown lately? :D

Mailman