Budget impacts salary sacrifice schemes - Shock announcement impacts employer computer loan schemes

Gordon Brown's tenth budget as chancellor of the exchequer sprang a shock for salary sacrifice schemes when the government announced today the removal of the tax exemption on employer loaned computers from 6 April 2006. “This will have a serious impact on many employers and those employees who have taken out salary sacrifice schemes to enable the private use of employer loaned computers in homes. Those presently committed and tied into such schemes may from April 6th be liable to be taxed on the benefit now being provided. This change means many employers will have to review their benefits policies immediately, and many of their employees could be hit by increased costs in less than a month's time.” Doug Sawers, Managing Director of Ceridian in the UK. As a result of the announcement, employers will have to review their policies of lending equipment to employees and their families. Employees who have joined a scheme through salary sacrifice will potentially see their costs increase by the tax on either the employer lease costs or 20% of the asset value of the equipment. Many employees will be tied into a three-year scheme, from which they cannot withdraw. Other measures announced include the removal of tax exemption for employees who are provided with more than one mobile phone for private use.

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