Changes to Cycle to Work Scheme

simple_salmon

I'll run that past our tax people - it's certainly a solution that's not been offered before.

Thanks for the suggestion.

simple_salmon

Spen - from what authority do you post on this? Have you been involved in setting up a scheme post 18/12/09 when HMRC put out new guidelines?

Have you sat in hours of meetings with I have with scheme providers to discuss how they will operate from now on?

Have you spoken with people at other organisations as I have to get their take on the changes?

Are you a tax expert?

Do you work for Cycle+, Halfords, or Cyclescheme the biggest scheme providers? All of who are making major changes to their operations.

You are very quick to put people down when they quote incorrect law in posts - take your own advice and listen for once to someone with experience in the area.

spen666

simple_salmon wrote:

Spen - from what authority do you post on this? Have you been involved in setting up a scheme post 18/12/09 when HMRC put out new guidelines?

Have you sat in hours of meetings with I have with scheme providers to discuss how they will operate from now on?

Have you spoken with people at other organisations as I have to get their take on the changes?

Are you a tax expert?

Do you work for Cycle+, Halfords, or Cyclescheme the biggest scheme providers? All of who are making major changes to their operations.

You are very quick to put people down when they quote incorrect law in posts - take your own advice and listen for once to someone with experience in the area.

Erm have a read at what has been written by you , by me and others

All you are doing is posting reasdons not to operate this scheme

Your posts on this thread are totally negative

Plenty of others are operating the scheme quite happily and without problems

I

simple_salmon

Spen - please listen to what I am saying. I'm aware that people are operating the scheme without problems - we have been for the last 18 months.

However - a set of changes by HMRC occured on 18th December 2009 which will have major impacts on future schemes and possibly on current schemes as well if my experience is anything to go by. These are an update from the changes in October that were linked at the beginning of this thread.

If you don't like the message then fine, ignore it, but I guess if I'm affected then others probably are too and I think some may appreciate the advice I'm giving that things WILL CHANGE.

Another example - we were told this morning that IT IS POSSIBLE that staff who have signed up believing that they will pay 5% at the end may now have to have the bike valued - that is a real concern for me since we have so many staff this could effect. If it doesn't happen then great but I think it's worth letting people know that anyone signing up in the future will NOT be offered the 5% deal by any scheme that is legally compliant - that's not negativity it's reality.

This is a genuine problem that I (and possibly others) have and thanks to those who have offered advice.

tarquin_foxglove

re: u-18's
Our scheme allows their parent/guardian to act as guarantor

re: Salary near minimum wage
Value of the equipment is limited &/or length of agreement extended up to two years to prevent salary sacrifice taking them under NMW.

However, these t&c's were in place when I got my bike last Feb so may not be compliant following the additional guidance from HMRC of 18.12.09

re: Salary at NMW
Everyone employed here is above NMW, however the original t&c said that "If your earnings in the future, fall below ... the NMW, you will not be able to participate and will cease to be entered into [c2w scheme] automatically."

What that means in practice though (they take the bike back?) I've no idea.

simple_salmon

Thanks Tarquin.

That seems similar to advice I've been getting elsewhere except that in the future it seems you will not be able to state 'you will not be able to participate'.

Not sure what happens if someone who is unable to participate (e.g. no salary; employed hourly) asks to join; currently it's clear as mud but here's hoping the guidance I'm waiting for from HMRC comes through soon.

It maybe the case that anyone can apply but could be turned down as unable to guarantee repayments. I think (from what's been discussed so far) that those people must be offered an alternative e.g. pool bike.

Currently this is slight conjecture.

bendertherobot

My employers have been QUITE clear on this.

I need a FAIR market valuation. And then I have to PAY that fair market valuation.

My 18 month old Lemond Zurich is in absolute pristine condition. It has full Ultegra.

It is EASILY worth £500.

So the total amount I have PAID for the bike is £1k plus £500. YES, I have saved NI and Tax meaning the amount it has COST me is less than that BUT the bike is going to end up in the region of £1k all in. For a £1k bike. There's no real saving here that a good 0% APR scheme won't do.

simple_salmon

Bender - have they given any advice on how to get a FMV?

Do you have to go back to the shop? Does it have to be in writing?

Any info gratefully received.

Pat Murray

simple_salmon wrote:

Spen - please listen to what I am saying. I'm aware that people are operating the scheme without problems - we have been for the last 18 months.

However - a set of changes by HMRC occured on 18th December 2009 which will have major impacts on future schemes and possibly on current schemes as well if my experience is anything to go by. These are an update from the changes in October that were linked at the beginning of this thread.

If you don't like the message then fine, ignore it, but I guess if I'm affected then others probably are too and I think some may appreciate the advice I'm giving that things WILL CHANGE.

I am with Spen here, nothing has changed the law is exactly the same. The guidance may have been clarified, nothing more. A quick google shows that this guidance was actually given in April 2008 http://www.hmrc.gov.uk/consultations/be ... 170408.htm ). Strange but in that two year period no one has shown any evidence of HMRC clamping down?

What is quite worrying is that someone as yourself who clearly has no understanding of tax is trying to give such negative advice which may put off people. Let’s look at the advice:
Like child care vouchers and other salary sacrifice schemes ehe scheme needs to be offered to all employees, in the case of those on NMW / hourly paid etc, fine have a couple of pool bikes as others have advised.

The bike needs to be sold at “a fair market value” – so an employer charges a nominal fee as a lot of company’s already do, if challenged by HMRC the onus would be on them to demonstrate that what was charged has led to a benefit in kind and to quantify that BIK. So a £1000 bike is sold for £1 + Vat at the end of a term, the actual value might be nearer £300 the BIK is £299, the amount payable would either be 20 or 40% of this. So for the lower rate tax payer a further £60 tax is due.

The scheme still represents excellent value for money and do you really think that HMRC want to get involved in chasing up the value of a second hand bike for at most a further £100, if there were real issues HMRC would just close the scheme.

Suggest that you take your misinterpretation and misinformation elsewhere.

bendertherobot

simple_salmon wrote:

Bender - have they given any advice on how to get a FMV?

Do you have to go back to the shop? Does it have to be in writing?

Any info gratefully received.

Yep, I just have to ask the shop who sold it. Now I could "have a word" with them, but that would be fraud.

What concerns me now is this.

The amount I've paid is £65 (near enough) per month. That's £1170 on a £1k bike. So my employer clearly couldn't recover VAT AND has passed an admin charge onto me. Hmm.

They won't let me buy the bike at nominal and LET me take my chance with HRMC. And that's interesting because the money I pay (let's say £500) goes to them.

So my £1k bike has a "cost" of almost £1700.

My net sacrifice is about £45 so still a "cost" of £810. Adding £500 to that now is still more than the bike cost originally.

I've put this to them, and they've gone quiet. Very quiet. I am slightly concerned that they are making money out of it!

Pat Murray

bendertherobot wrote:

Yep, I just have to ask the shop who sold it. Now I could "have a word" with them, but that would be fraud.

What concerns me now is this.

The amount I've paid is £65 (near enough) per month. That's £1170 on a £1k bike. So my employer clearly couldn't recover VAT AND has passed an admin charge onto me. Hmm.

They won't let me buy the bike at nominal and LET me take my chance with HRMC. And that's interesting because the money I pay (let's say £500) goes to them.

So my £1k bike has a "cost" of almost £1700.

My net sacrifice is about £45 so still a "cost" of £810. Adding £500 to that now is still more than the bike cost originally.

I've put this to them, and they've gone quiet. Very quiet. I am slightly concerned that they are making money out of it!

Have you sought clarification as to why your employer has not recovered the VAT element?

I would suggest that you pay them a £1 and tell them to fill in your P11D with whatever the LBS say it is worth. You will then have to pay 20% of that in taxable benefit. It is not up to them as to how they deal with HMRC - its your tax and pay on which they have saved the NI.


I would also suggest that you find a more acommodating employer!

alfablue

Profiteering out of the scheme by employers is certainly not in the spirit of the scheme, but could it also be illegal?

I think you are in a very strong position to be shouting the odds and demand a reasonable settlement (including any overpayment), or if they prefer you will talk to HMRC and see what they think of your employer's practice.

If they have deducted sums that you did not sign up for, that is also an illegal deduction from earnings.