Company Car and Fuel Benefits
The tax benefit of fuel provided for a company car is computed by applying to a set figure the percentage used in calculating the company car benefit itself. For 2006/07, that set figure is frozen at £14,400.

In computing the company car benefit, the lower carbon dioxide emissions threshold had already been frozen at 140g/km for 2006/07 and 2007/08. For 2008/09, it will be reduced to 135g/km. Cars with emissions of no more than the lower threshold qualify for the lowest rate (currently 15%) that can be applied to the list price of the car. However, for 2008/09, a new lower rate of 10% will be introduced for cars with carbon dioxide emissions of no more than 120g/km.

Exemptions for Computers and Mobile Phones
At present, where a computer is loaned by an employer to an employee for private use, the first £500 of the annual benefit in kind is exempt from income tax. This exemption is removed for 2006/07 onwards.

There is currently no limit on the number (or value) of mobile phones that can be loaned by an employer to an employee for private use. For 2006/07 onwards, the number of mobile phones that can be loaned without giving rise to a taxable benefit in kind is restricted to one per employee; there will be no exemption for phones loaned to a member of the employee’s family or household. Also for 2006/07 onwards, if an employee receives a mobile phone under salary sacrifice arrangements, this will not give rise to a charge to tax on general earnings, even if the employee can surrender the phone for additional salary. If a voucher is used as a means of making a mobile phone available to an employee for private use, no charge to tax or NICs will arise if the benefit would have been exempt (i.e. under the one phone per employee rule above) if a voucher had not been used.

VDU Users: Eye Tests and Glasses
The legislation is amended to ensure that with effect from 6 April 2006 there will be no charge to an employee where his employer provides for him, or meets the cost of, eyecare tests and/or corrective glasses for VDU use. No charge will be made however the employer makes payment, whether it be by direct payment to the provider, reimbursement to the employee or by provision of a voucher to the employee. Currently, some non-cash vouchers are taxable.

Anti-avoidance: Employment-Related Securities
The Government announced on 2 December 2004 that any future legislation required to tackle tax and NICs avoidance in this area might be applied with retrospective effect from that date. Such retrospective legislation will now be included in Finance Act 2006 to counter certain avoidance schemes that exploit the rules relating to options over shares and securities. The legislation will consist of a targeted purpose test to be applied where such an option is used as part of an avoidance scheme.

The option itself will be brought within the definition of a security, with the result that it may then be a convertible security to which pre-existing anti-avoidance legislation will apply. Draft legislation is available at www.hmrc.gov.uk/budget2006/ers-anti-avoidance.pdf and www.hmrc.gov.uk/budget2006/ers-paye.pdf.

Employer-supported Childcare
From 6 April 2006, the income tax and NICs exemption for employer-supported childcare is increased from £50 to £55 per week.