Now this is not strictly allowed on this site but...

mea00csf

Rockhopper wrote:

I thought the figure if 5% was chosen becasue its accepted by the Inland Revenue as being a fair valuation. If the company were to give you the bike for free at the end of the period then it would be a taxable benefit.

Just picking up this end of C2W scheme. the company is NOT obliged to sell, and MUST NOT at any point state that they will sell the bike at the end of the c2w scheme or state at what value. This is because the c2w scheme is only a lease scheme, it isn't a hire purchase scheme. If the company was to guarantee purchase at the end it would mean that it was effectively providing credit to employees and would have to become approved to provide credit, this is beyond the scope of what most companies would do.

the 5% at the end of the c2w scheme is a bit of a farce and comes from the scheme that ran prior to c2w which was the HCI (home Computer Initiative). 5% of a comp used for 1year is clearly more appropriate, this was just transferred to the c2w scheme with little thought as to how bikes depreciate differently. It's suggested in the guidance that this MIGHT be appropriate, but companies are under no obligation to either sell or to sell at this value. If a company runs the c2w scheme for a year then charges true market rates at the end they are completely within their rights.

Sorry for the rant, I know cycle to work has helped lots of people to get great bikes, helping people to buy bikes effectively on 0% credit with the added bonus of not paying the tax. But it really is a cockup of a scheme as far as providing security for the purchaser. I'm sure very, very few people get shafted on this, but they shouldn't have left that loophole. Oh, and the other thing, when you look into the detail, you are actually making a salary sacrifice, this means you're accepting a reduction in salary and therefore your company is under no obligation to increase you're salary at the end of the c2w scheme. :?

robthehungrymonkey

As said above, if it's your company why sell it?

You can keep it within company ownership (whilst it's still depreciating ) and then maybe buy it at another date. You personally don't have to continue "hiring" the bike, so are entitled to anotehr under the scheme.

Correct?

(it's rellevant to me, as I am trying to buy a bike for myself through the Family business)