All employers appreciate the importance of computer literacy among their workforce. IT skills are now recognised - together with literacy and numeracy - as being life skills, which give staff more scope for contributing to the performance of their employer's organisation and for adapting more readily to new roles and challenges.

Hardly surprising then that research shows that 74 per cent of all employees use computer skills and that 90 per cent of new jobs require them.

Many organisations, however, still have workforces where these crucial skills are lacking and as such, they may be restricted in their ability to compete in the marketplace or perform to their full potential.

A cost-effective way in which an organisation might address this is by establishing a home computing initiative, or HCI scheme. HCI schemes, which are available to employers as a result of the government's tax exemption on loaned computers, allow employers to make tax-exempt loans to their staff for the purchase of computer equipment to be used at home.

Many employers introduce HCI schemes on the basis of salary sacrifice, thereby making them cost neutral. On this basis, the employee accepts a reduction in his gross salary in return for the use of a loaned computer. As well as making the employee's salary go further by providing a tangible benefit, the employer may, depending on the scale of the HCI scheme, actually be able to save on National Insurance contributions.

Alternatively, there is nothing to stop employers from offering entitlement to participate in an HCI scheme in addition to the general package of workplace benefits, perhaps with the intention of strengthening relationships with employees.

HCI schemes are typically run in partnership with technology providers who will assist the employer in promoting take-up across the workforce and ensuring that both employer and employee are aware of the legal and taxation consequences - principally the income tax exemption, the VAT position, and the way in which any salary sacrifice should be implemented and any Consumer Credit Act implications.

- Stephen Elliott is a solicitor in the employment team of North-East law firm Ward Hadaway. He can be contacted on 0191-204 4000 or by email at stephen.elliott@wardhadaway.com

Published: 03/02/2004