Employee benefits that survive

One of the big surprises of this year's Budget was the sudden ending of the home computer scheme for employees on 6 April 2006, especially after the Department of Trade and Industry had done so much to promote the home computing initiative. Computers provided to employees before 6 April 2006 remain exempt, provided the value of the equipment was not more than £2,500.

Employers can still provide employees with computers for business use, for example if employees work at home or need a laptop for use on business trips. There is no tax or national insurance charge if the computer is provided solely for business use and there is little or no private use – so not too many personal emails!

In another cut, employees will only be able to have one tax-free mobile phone supplied by their employer. They will now be liable to tax on mobile phones provided by their employer apart from the first one. Until 5 April 2006, employers could provide any number of phones to employees and their families and pay the cost of all calls, without any income tax or NIC charge. Phones provided before 6 April remain exempt until replaced.

Remember that the tax exemption only covers a phone that the employer provides. If the employer pays the employee’s own bills for buying a mobile phone or making calls from it, the private element is subject to both income tax and national insurance contributions.

One exemption that emerged unscathed from the Budget is for bicycles lent to employees. Bikes and cyclists’ safety equipment are exempt if they are offered to all employees and used mainly for journeys to work, between workplaces or in breaks from work. Employees do not have to keep detailed records of use. The exemption also covers the provision of a voucher for hiring bicycles and equipment.

Employees who use their own bicycle for business travel can claim a tax-free 20p mileage allowance, though not for cycling to work.