Computers loaned to employees

Our team of experts explain how to report loans of computers to HMRC

Our experts at DSR Tax Claims know how hard it is to find good, quality information about HMRC’s tax regulations that is easy to understand, and that’s why we have created these handy guides to tell you everything you need to know. Our aim is to make life easier for our clients and that is why we want to share our expertise with you. You can also call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.

How do you treat computers loaned to employees?

If you are an employer and you lend any computer equipment to your employees, you might need to report this to HMRC, depending on the circumstances of the loan, and as a result you might be expected to pay more National Insurance. There are different rules in place if you loaned the computer before 6th April 2006 and we will look at those rules later.

Are there any exemptions?

If the computer was provided for work purposes and the employee doesn’t use it for any significant amount of private use, you don’t need to report this to HMRC or pay any additional National Insurance. If the computer forms part of a salary sacrifice arrangement, it will need to be reported to HMRC though.

When HMRC refers to “not significant private use” they don’t define exactly what they mean by this, which can make it difficult to determine whether the computer you have loaned is exempt or not. If you, as an employer, have drawn up a policy which clearly defines what you mean by private use then HMRC expect you to use those guidelines. HMRC also state that where the computer is provided so that the employee can carry out the duties of their job at home or whilst travelling for work, then it is highly unlikely that any private use of the computer would be significant when compared to the business use of the computer. When determining this, you need to think about how you would explain this to HMRC if they were to investigate your chargeable benefits.

What do you report and pay?

If the computers aren’t exempt because your employee makes significant private use of them then you need to report them to HMRC on your P11D form and you will have to pay Class 1A National Insurance on the value of the benefit.

To work out the value of the benefit (in this instance, loaning the computer), you need to work out the value of 20% of the greater of either the computer’s market value at the time you provided it or any rental charge you pay for it. Then add any running costs that you cover (maybe repairs or maintenance) and take away any amount that your employee contributes to the cost of the loan. This leaves you with the value you need to report to HMRC.

If the computer loan forms part of a salary sacrifice arrangement and the amount of salary given up is greater than the cost of the computer, you need to report the salary amount instead. This only applies to salary sacrifice arrangements made after 6th April 2017.

What happens if you loaned the equipment before April 2006?

According to HMRC, if the computer was loaned to the employee prior to 6th April 2006, this doesn’t count as a chargeable benefit and therefore doesn’t need to be reported to HMRC. This is because it was loaned under the Home Computing Initiative and was exempt for HMRC purposes.

How can DSR Tax Claims help?

We aim to make life as simple as possible for our clients and that includes giving you the information you need to make your taxes (and your life) simpler and less stressful.  Our team of experts at DSR Tax Claims are always on hand to help our clients and our excellent standing with HMRC means that we can make sure you don’t fall foul of their regulations, while claiming your maximum tax relief. We can even take care of all that paperwork and deal with HMRC on your behalf too. Call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.

This page was last updated on 06/11/2018.

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