EMPLOYERS who provide certain benefits, including bicycles, can now do so without staff incurring any income tax on the value of that benefit.

Wycombe accountants Saffery Champness says recent changes to the law mean that firms who wish to make available a selection of additional benefits to staff can do so in a tax-efficient way for the employees.

Items such as bicycles and home computers can now be included as benefits and the ruling also extends to childcare and full-time college courses.

An employer may provide an employee with a bicycle and cycling safety equipment without any benefit in kind charge arising for the employee. The recent Finance Act also now ensures that the employee may then buy the bike at a later stage at market value without incurring any tax charge.

Like bicycles, there is now a specific exemption for home computer equipment owned by the employer. This has a maximum value of £2,500 and can include a printer, scanner, modem, discs and software.

A number of suppliers are now arranging home computer initiative schemes which are not taxable for the employees. For instance, employees can agree to sacrifice a set amount of salary each month in return for computer equipment loaned by the employer. At the end of the agreement, the employee buys the computer at market value which tends to be a small sum.

Leah Sowden, partner of Saffery Champness, said: "Flexible benefits are becoming more a popular way of rewarding employees and can be tailored to suit different employee lifestyles. If there is a tax benefit as well as a personal benefit, then it is a real sweetener for employees to take up the options offered to them by their employer.

"The home computer option is already becoming popular and the provision of bicycles could become much more attractive in light of recent announcements to introduce pay as you go' road charges."

There's another slice of good news for employers. From September 1 2005 they will be able to pay employees up to £15,000 per academic year, tax and national insurance-free, where they are on full time courses at universities and technical colleges for at least 20 weeks per year. The previous limit was £7,000 tax free, but national insurance did apply.