Finance (No. 2) Bill 2006 — Remove income tax exemption for computer equipment — 2 May 2006 at 20:30

The majority Aye voters passed a measure that would remove the income tax exemption for computer equipment^[1].

The original aim of the exemption was to promote household computer use by encouraging employers to loan computers to employees.

Dawn Primarolo MP explains why the government decided to remove the exemption as follows^[2]:

• 'It is perfectly true that many employees have benefited from the tax exemption, but the home computer initiative (HCI) has been used extensively by groups that we would not generally expect to have difficulty accessing information technology. For example, 25 per cent. of those participating in the home computer initiative are higher rate taxpayers—more than twice the proportion among taxpayers as a whole. Furthermore, nearly one third of HCI participants are from white-collar industries—often defined as industries with a greater proportion of higher-than-average earners.'

However, Mark Francois MP argues against the measure as follows^[3]:

• 'The scheme has proved popular, with about 500,000 people taking advantage of it effectively to hire a computer from their employer to help to improve their IT skills as part of a modern knowledge-based economy. This is especially important when we are seeking to improve IT skills to allow the UK to continue to compete with economies such as China and India in the 21st century. According to a recent analysis carried out by Hewlett-Packard, China and India between them now produce more than 120,000 IT graduates each year. How are we to compete effectively with that if we are bringing in measures to reduce the spread of IT literacy among our population, which is what the proposed change threatens to do?'

This measure eventually became law on 19 July 2006 when the Finance (No. 2) Bill 2006 received Royal Assent.

The Finance Bill set the government's budget for the 2006/2007 financial year.

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• [1] The vote was on whether Clause 61 (pdf document - scroll to page 58) should remain in the Bill. As you will see Clause 61, in turn, removes section 320 from the Income Tax (Earnings and Pensions) Act 2003.
• [2] Dawn Primarolo MP, House of Commons, 2 May 2006
• [3] Mark Francois MP, House of Commons, 2 May 2006

Debate in Parliament | Source |