A Birmingham tax accountant has accused the Government of shooting itself in the foot over its Home Computing Initiative.
Thousands of employees across the UK have been able to acquire computers for use at home through what was marketed by the Department of Trade & Industry as the Home Computing Initiative.
But in Gordon Brown's latest Budget, he withdrew tax exemptions from April 6 for computers loaned to staff by their employers.
Simon Littlejohns is tax partner at accountants PKF in Birmingham which has already withdrawn from the scheme since the Budget.
He estimates that thousands of businesses across the UK will also be taking the same decision.
He said: "This has to be the worst case of the left hand not knowing what the right is doing I have ever seen.
"This was a DTI initiative aimed at helping build IT literacy in the next generation and giving the current generation the chance to play with computers at home and learn new skills without the embarrassment that often comes with owning up to IT illiteracy at work.
"I thought the aim was to improve the nation's IT skills and promote learning through fast broadband access to the internet."
The Home Computing Initiative was launched in 1999 and worked by removing a large part of the usual tax that would have been normally levied on loaned computers, which previously were taxed as a benefit in kind.
Mr Littlejohns said: "This was a straightforward way of putting a computer in your home, via your employer.
"For your staff, the advantage was they could have a new computer and ancillary equipment, but avoid being taxed at the highest rate on up to 20 per cent of the loan.
"The scheme also meant that both employers and their staff could reduce their National Insurance contributions if the loan of the equipment was repaid via an arrangement known as 'salary sacrifice'."
The Government expects to get back £50 million in the coming financial year by abolishing the tax exemption, rising to £150 million in 2008-09.
"When you set the benefits of promoting a computer literate society against these kinds of figures, you have to wonder if anyone in the DTI or the Treasury has ever met, far less had an intelligent conversation about this!" said Mr Littlejohns.