Bit of a blow with Cycle to Work

Kieran_Burns

It turns out that my Compny is enforcing the limit on the CTW of £1000. I have the DfT guidlines here and they are pretty unequivocal. You can't spend over £1000 on a bike.

Get this:

3 What value of equipment can be supplied?
There is no limit on the total value of the equipment including the cycle. It is possible to loan two cycles to one employee if, for example, that employee needed a cycle at either end of a train journey between their home and place of work. (However, please see Section 9.1 where the Office of Fair Trading (OFT) has advised that the group consumer credit licence will cover schemes up to a value of £1,000).

Sounds great!

Except following the link to section 9.1:

9.1 Consumer Credit Licence
Any employer entering into the scheme will need the cover of a consumer credit licence. In order to facilitate the scheme the OFT has issued a group consumer credit licence designed to cover employers setting up Cycle to Work schemes so that employers need not apply individually for credit licences’ for this purpose. Employers will be covered by the group licence so long as they are undertaking activities within its terms. The group licence covers only consumer hire business, (not the making of hirepurchase agreements - see below) for the purpose of providing employees with bicycles and or bicycle equipment up to the value of £1000, including VAT and not taking into account any income tax exemption under an employee benefit scheme, that is, the market price the employer pays or seeks to recover from the employee by way of hire charges.
If employers also undertake regulated business other than that described in the group licence or wish to offer packages in excess of £1000, they will need to obtain a standard licence to cover that business.The Cycle to Work Group Credit Licence can be seen at http://www.oft.gov.uk (Home> Business information> Legal powers> Consumer Credit Act).

My HR department interpreted this as: you can't spend more than £1000.


So, two things:

Are they right? If not, how can i convince them?

If they aren't - what is the very best road bike I can get for £1K???

Fireblade96

Do a deal with the shop - you get a voucher from your company for £1000 and you pay the excess yourself. You won't get the tax advantage on the excess, obviously.

Otherwise, I'm loving my £995 Wilier la Triestina :-)

In fact, time for a gratuitous Wilier pic:

wantaway

there is nothing to stop you buying a more expensive bike and paying for the extra yourself.

I think most places use the £1k cap though.

Agent57

As I understand it, you can spend up to £1000 without a consumer credit licence. You can spend more than that if the employer has a consumer credit licence, or is willing to get one. But if they don't already have one it's additional paperwork and expense. The fees are quite high - £970 for a company (and I think that's each year).

http://www.oft.gov.uk/advice_and_resour ... cence/fees

Kieran_Burns

Yeah - you see, this is where I get confused.... if you pay the excess then the company aren't providing a package worth more than 1K, or are they? Given that the bike is worth more but they aren't SPENDING more - where does that leave you?

Agent57

Well technically it's moot as you're only supposed to be able to buy complete bikes in the scheme, not half-and-half jobs. It all gets a bit messy with partial purchases; who owns what? If you own part of the bike, you're not leasing the bike from the company, really, and it wouldn't qualify for tax relief. In practice, a lot of people and bike shops abuse the scheme in this way, and I don't know of any cases where the tax man has got uppity about it, but your employer is well within their rights not to allow you to use the scheme to partially fund a purchase.

Coriander

KB, I might be teaching my grandmother to such eggs, but if your workplace are being so pedantic about their application of the C2W rules, you might want to double check what they'll charge you at the end of the 12 month period to 'buy' the bike from them. I've heard some stories of people ending up spending more, with the 'rental' costs and then the 'buying' cost, than if they'd bought the bikes themselves without the scheme.

Fungus The Muffin Man

If my work place was to start the c2w scheme withthe £1000 limit. Could I get a bike for say £500 and use the other 500 to get upgrades for the bike I have now? I bought a new road bike a couple of months ago so was thinking I would try and get a full susser on a good half price deal (if I could) and then use the rest for a wheel and brake upgrade on the road bike. I know you can use some of te money to buy accessories so could I pass the parts of as that?

simple_salmon

I'm going to play Devil's Advocate here so bear with me:

As a Transport Co-ordinator I battled for 5 years to get this scheme introduced at work. It is first and foremost a scheme to get new cyclists to ride to work; it is not designed for existing cyclists to upgrade to new steeds. Since it is easy to get a decent commuter and indeed allrounder for <£1000 then the limit is fair enough.

I would be furious if someone trying to 'get around' the rules put our scheme in jeopardy because our HR department decided it was no longer worth the hassle of providing. So far this year we have had over 30 members of staff benefit from a cheaper bike to start cycling to work on. Looking at the costs of those I would say that no more than 2 were existing cyclists upgrading. So for us the scheme is a total success and I don't want that jeopardised.

It's not about HR departments being pedantic it's about keeping within the rules so the scheme continues (unlike the computers initiative which was dropped). You CANNOT double check what you will have to pay at the end since legally no such guarantee can be made - if it is then the scheme is HP and as such is not tax free.

These rules may not be popular but they are what we have been given and as such companies should stick to them.

Fungus The Muffin Man

I would argue that the new bike I am buying will allow me to bike to work in winter when I didn't previouly. As I didn't deem it safe enough to be on a bike with such thin wheels. That would mean that I would then be in a position to hand in my parking permit which we have to pay for and ensure there is 1 more parking spot available to patients and relatives who struggle to find parking due to the HUGE shortage af parking on the hospital site I work with.
So technically they will have encouraged a new commuter therefore improving the success statistics they were hoping for. 1x handed in carpark permit = 1x success.

simple_salmon

Absolutely, I agree with you 100% Fungus but you can only do it within the rules. Like much in life really.

I'm not saying I agree with the £1000 limit; personally I would make all bikes tax free because of the huge benefits they provide to society. My point is really that whilst all we have is this scheme it should be used for its intended purpose or we could find we're left with nothing.

woodford2barbican

My LBS will sell me a frame and let me tranfer my existing Ultegra groupset to it. Can get a pretty good frame for £1k.

Kieran_Burns

I guess I may be looking at a £1K bike at this rate.

I wonder if my LBS will have the 2009 models for sale in a few weeks?

Sewinman

Get this for a blow - buy my Wilier on C2W, get a new job three weeks later. Resign, get paid a week later with a £1000 debit from my salary! :oops: August is going to be fun!?

dirk_van_gently

Be thankful you have a C2W scheme.

As a self employed contractor, I get none of the C2W benefits.
I stumped up my own money. That is a hint BTW and that is a smilie, so as no one is in any doubt about my "tongue in cheek" intentions of the posting.

Now I will get mi coat.

Eau Rouge

The blurb above is talking about a Consumer Credit License. It's saying there is a generic group CCL that covers employers to use the scheme.
Some, though not all, companies will have their own CCL and if they have that, they can then exceed the £1000 limit of the scheme's CCL.

It comes down to whether your employer has one of these CCL's or not, which I guess comes down to what they do.

My employer has such a license, and allows us to go up to £1500, which I did.

Kieran_Burns

My employer doesn't and won't

However, after popping over to my LBS (to pick my bike up after the service) and having a natter I found out what they did for Rolls Royce and I will be doing the same

Trek Madone 4.5 here we come!

snig

your lucky my work only allow £500!

Eau Rouge

simple_salmon wrote:

It is first and foremost a scheme to get new cyclists to ride to work;

<Sir Humphrey Appleby mode ON>
It's not. Yes, it is a scheme that allows new cyclists to buy a bike. It also allows existing cyclists to upgrade. It give a boost to the bike industry in the UK (which is mostly retailers) by encouraging people to buy pricier bikes than they might otherwise have done, or even to buy new instead of second hand.
However, it is first and foremost a scheme designed to cut the cost of employing people in the UK for large multinational companies. There are a whole host of things this country does to attract foreign investment, this is a pretty small part of that, but a part of it nonetheless.

Anyone buying a bike through the scheme is reducing their employers National Insurance costs, a significant saving. With that in mind, the more money spent on bikes in the scheme the better it does it's job,
Everything else is a nice side effect that looks good in a Press Release.
<Sir Humphrey Appleby mode OFF>

simple_salmon

The clue is in the title

Aguila

Sewinman wrote:

Get this for a blow - buy my Wilier on C2W, get a new job three weeks later. Resign, get paid a week later with a £1000 debit from my salary! :oops: August is going to be fun!?

I also left my job prior to finishing the year of repayments (although after 7 months not 3 weeks!!).

However, as long as they took the £1000 from your pre-tax pay not post tax you will still have got the bike tax free. This is what they did with me.

Sewinman

I was told they could only take one months payment from pre tax pay as i had only been in the scheme for that long, the rest was taken post tax. I got the VAT off, so saved 15%.

Eau Rouge

simple_salmon wrote:

The clue is in the title

It's a governmnt scheme, the title is irrelevent.

Christophe3967

There are no limits on the value of bikes that can be provided under CTW. Because an employer may use the standard Consumer Credit Licence, for £1,000, without needing to do very much, this is the normal course of action. However an employer may apply for a CCL that covers a greater amount, but given that £1,000 is reasonable, the perceived work involved and the relatively low take up rate of most CTW schemes, few do. I am aware of one firm in London where one of their employees has a £7,000 bike through the scheme. Not sure what his FCN number is though...

cyberknight

Dirk Van Gently wrote:

Be thankful you have a C2W scheme.

As a self employed contractor, I get none of the C2W benefits.
I stumped up my own money. That is a hint BTW and that is a smilie, so as no one is in any doubt about my "tongue in cheek" intentions of the posting.

Now I will get mi coat.

Surely though your VAT registered can you put it through the books? mode of transport ?