Warning about C2W
Comments
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bannedbiker wrote:I got £1000's worth of bike for £769, i got to pay that over 12 months without interest.
Yeah, that's pretty much the nail on the head there!
Enjoy "your" shiny new bikes everyone!
Cannondale Synapse 105, Giant Defy 3, Giant Omnium, Giant Trance X2, EMC R1.0, Ridgeback Platinum, On One Il Pompino...0 -
TommyEss wrote:bannedbiker wrote:I got £1000's worth of bike for £769, i got to pay that over 12 months without interest.
Yeah, that's pretty much the nail on the head there!
Enjoy "your" shiny new bikes everyone!
Mine's Sh1t high after the ride in this mornin...!
:P Giant Reign - now sold :-(
Rockhopper Pro - XC and commuting
DH8 - New toy :-)0 -
Really all depends on your company.
I paid nothing for the bike to be mine after 12 months, as it's clearly all BS that 'rule'... You've sodding paid for it, so why should it not be yours...
My company is happy I ride to work.. No tubes to not run due to strikes, snow, rain or acts of god, I'm always on time.0 -
Surely you checked all this before handing over your hard earned each month?cgarossi wrote:I read everything. The nominal fee is fine.
My points are:
1. I was led to beleive the payments I made count toward the bike cost. They don't.
2. The final payment is what ever the bike is worth at the end of the lease period. Its NOT a percentage of the lease cost.
3. The bike NEVER belongs to you unless it is sold to you by the company which is VAT chargable.
4. The total cost of leasing the bike plus any payment at the end (should you wish to pay it) can be more than the bikes retail value.
This has all been verified by a man in a knitted tank top and round glasses named Tim. He's from the VAT office.
Anyway from my company's perspective they simply charged what amounted to about one extra months fee at the end of the lease period to take ownership of the bike. The reason that "fair market value" can not be named up front is that any guarantee on sale price would be a benefit in kind and this would exempt the whole scheme from salary sacrifice and you'd save nothing.
Ultimately though the amount ends up being very low as otherwise they would get disagreements with staff and would end up having to individually assess each and every single bike on the scheme - which would cost them money. It's a bit of a tax fudge but by companies saying "yeah, it's about 30 quid" everyone ends up happy without any fuss about too much detail with regards to tax. I.R. are obviously ok with this.
For my £1000 FSRxc I ended up paying about £640. Got to be happy with that. You only need two tools: WD40 and Duck Tape.
If it doesn't move and should, use the WD40.
If it shouldn't move and does, use the tape.0 -
This is the funniest thread I have read in ages, thanks!
OMG! I signed something without reading it and now I can't believe it's got terms and conditions in it that I hadn't guessed would be there!!!!!
I hate to take the mickey (actually, no I don't), but if you are going to sign anything, it's always best to understand what it is you are signing. A good starting point is to read the agreement and any ancillary information you can find. They are designed to be joe public friendly.0 -
I also doubt that your company HR and the external administrators who run your flexible benefits system didn't make this clear.
After a look at every flex bens site we administer, it's in bold as you like writing, not to mention when you make the selection it gives you a 2nd chance/warning before you submit it finally.
Also the reason most of the final payments are just lowish figures/5%/an extra month's payment is because of the sheer volume of people in schemes that select this benefit. The HMRC doesnt have time to check it all properly and evaluate fair market values etc. They may look at one individual within a scheme to see that "guidelines" are being follwed but no way each and every one2009 - Boardman Pro '09 HT MTB
2013 - Cannondale F29 1 '13
2017 - Haibike Freed 7.5 carbon HT + full Hope parts (no..not an e-bike)0 -
The info is all on the Cycle Scheme website. I wouldn't worry about it - most companies are going to be reasonable towards their employees. This scheme is effectively an incentive, after all.
The typical fee tends to be 5% of the purchase price, although mine aren't even asking for anything at all!0 -
I think my boss has already set up an ebay account to sell all the bikes on at the end of the lease (joke)0
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Employers do not want a whole shed of bikes to dispose of so most will do what they can to make sure you take it! This is likely to be the case even if you leave the company half way through the lease period. As long as they are not out of pocket it is unlikely that you won't still save some cash over the RRP.
Now on my second scheme and second bike - love it 8)Scott Genius 08, Marin Rock Springs 08, Marin Pine Mountain 890 -
Has anyone had any success in disputing the size of the final payment? If so, how did you calculate the 'Fair Market Value'?
When my employer asked for the final payment it was just over 9% of the voucher price and, as approx 10% of my voucher price was for clothes and other bits & pieces with no real 2nd hand value, I thought it was a bit high. I queried it with them, raising my concerns and offered a payment equivalent to just under 5%.
I then received a letter from cyclescheme saying where to return the bike etc, which I ignored and spoke direct to my employer again; they now want the shop, where I bought the bike, to value it and to send the valuation in to them to support my argument of a smaller payment.
My friendly LBS is the place where I bought the bike and I'm sure will complete the paperwork as directed but how do I direct them?
What is the 'Fair Market Value' based on and how is it calculated?0 -
My final payment was 5% of the purchase price, so 50 quid. This is quite common but for some technical reason they can't tell you this figure up front - I think it's because it then would be a credit agreement and therefore taxed (or something like that). This information is easily available and at the very least your accountant should have read it!'Happiness serves hardly any other purpose than to make unhappiness possible' Marcel Proust.0
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passout wrote:My final payment was 5% of the purchase price, so 50 quid. This is quite common but for some technical reason they can't tell you this figure up front - I think it's because it then would be a credit agreement and therefore taxed (or something like that). This information is easily available and at the very least your accountant should have read it!
My employer wanted 9%; I counter offered 5%.
They've now said back up your offer of 5% with proof from LBS.
My question is, as you say
but how is this "5%" calculated?passout wrote:My final payment was 5% of the purchase price, so 50 quid. This is quite common
If it is the estimated 'Fair Market value' for a year old, second hand bike, why is it 5% and not say 50%.
Are they taking into account the payments that have already been made for the bike? If they are what is the calculation?0 -
sheepsteeth wrote:id be very happy if all second hand bikes were worth 5-10% of their original market value after 12 months.
they are.....
as far as it is an asset, which has depreciated....if the inland revenue was to value a year old bike used for commutung to work etc etc then that would be their valuation. between 5 an 10% of original cost.
Its just that:
a) The bike I bought for £1000 a year ago is going to cost me a grand to replace...so I want top dollar for it.
b) people are willing to pay more than the true asset value.....
thats the beauty of a free market...I can sell you a half empty tube of toothpaste for 100% of its original cost if I was the seller and you as a buyer agreed that you were willing to pay.
This is the same argument to those..how much is my bike worth threads...the reality is...not as much as you want it to be, and whatever anyone is willing to pay.Whenever I see an adult on a bicycle, I believe in the future of the human race.
H.G. Wells.0 -
This is taken from the scheme site, clearly states the word 'hire' throughout.
What's the process of getting a tax free bike for work through Cyclescheme?
* Step 1. Once an employer has entered into a contract with Cyclescheme (employers can sign up via this website) any employees wishing to participate need to visit a Cyclescheme Partner Shop to choose the bike and, if required, safety equipment. Find participating bike shops using the search on this website.
* Step 2. Employees then apply for a Cyclescheme Voucher by finding out their Cyclescheme Employer Code and entering the information provided by the bike shop online. The employee will usually sign an online Hire Agreement at this time.
* Step 3. If the employer approves their application they will countersign the Hire Agreement and pay Cyclescheme for the full retail price of the bike and equipment.
* Step 4. Cyclescheme will then issue a Voucher to either the employee or the employer, wherever is requested.
* Step 5. The Voucher is then redeemed in the bike shop and exchanged for the bike package. Salary sacrifice then commences over the hire period (usually 12 months).
* Step 6. At the end of the hire period the owner of the bike may choose to offer the employee ownership of the bike for a full market value.
Please note that although the above procedure applies to the vast majority of schemes. there are some variations to the above which are a result of the way an employer’s scheme is set up, such as if they are using a finance company (see below) or a benefits provider.
Who actually owns the bike?
The bike and goods remain the property of the employer throughout the hire period, unless the employer uses a finance company to fund the bikes; in this case the finance company or funding bank will own the bikes.Kona Tanuki Deluxe0 -
tarquin_foxglove wrote:passout wrote:My final payment was 5% of the purchase price, so 50 quid. This is quite common but for some technical reason they can't tell you this figure up front - I think it's because it then would be a credit agreement and therefore taxed (or something like that). This information is easily available and at the very least your accountant should have read it!
My employer wanted 9%; I counter offered 5%.
They've now said back up your offer of 5% with proof from LBS.
My question is, as you say
but how is this "5%" calculated?passout wrote:My final payment was 5% of the purchase price, so 50 quid. This is quite common
If it is the estimated 'Fair Market value' for a year old, second hand bike, why is it 5% and not say 50%.
Are they taking into account the payments that have already been made for the bike? If they are what is the calculation?
no...fmv for a year old bike will be different for two people. If I ride mine everyday....but you only ride yours 50% of the time...then my fmv will be lower than yours. simple. your company have valued your bike (perhaps just by sticking a finger in the air and pulling 9 out of somewhere but hey) at 9%.
You countered....they said provide proof...sounds fair to me.Whenever I see an adult on a bicycle, I believe in the future of the human race.
H.G. Wells.0 -
cee wrote:no...fmv for a year old bike will be different for two people. If I ride mine everyday....but you only ride yours 50% of the time...then my fmv will be lower than yours. simple. your company have valued your bike (perhaps just by sticking a finger in the air and pulling 9 out of somewhere but hey) at 9%.
You countered....they said provide proof...sounds fair to me.
I don't mind providing proof but I would feel more confident if that proof was based on something concrete.
Can't be as simple as getting the LBS to state its worth as 5% of the voucher price.0 -
The 5% is just a nominal figure supplied by the scheme. An example.
Some employers are happy to let it go at that guideline. But there is nothing concrete about what it should be.0 -
I've been told by HR that my company will charge me a 'nominal' fee of £5 for a £1,000 bike.0
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Phew that took some reading.
I am going to throw a new situation at you all.
I am under the impression that the rules of final ownership are changing/changed. The company has to offer the bike to you for the FMV (or keep it) which they have to get a quote for! I Think that it will be like a VAT/MOT inspection and will be completely random. EG, your hire term is up and you may get an independant inspector come to view your bike and make a quote of its worth. That would be the final payment. You could be out of pocket by say a £100 on a grands worth of bike.
FWIW. My company only charges an unwritten £5 for the final payment. That could change. Its been reported that they may opt out of c2w due to the changes.fly like a mouse, run like a cushion be the small bookcase!0 -
spin_to_win wrote:The FVP ( Final value payment.) cannot be value till the end of the term - this is due to wear and tear on cycles differing this could cause a tax issue with "benefit in kind".
As to its value if you accept that the bike is a year old and old bikes are discounted on the web by as much as 40% ( £1000 bike for £599 ) then the bike is used/second hand making it worth half again ( £599 new £300 second hand.) The cycle will have in theory been used for 50% of your work journeys thus require a substantial service - labour,parts- probably a new drivechain and tyres etc this would work out about £150 - £35lab,£25chain,£35cass 2x£20 tyres £15cablekit the service parts reflect the quality of parts on the original cycle - other parts maybe reqired - front chainrings,bb thus a further £50-£60 could be ness. thus to value the cycle a simple formula of Original new value (£1000) - current new value (£599) - second hand value 50% (£300) - required service costs (£200) = FVP £100
As a guide
Add a fork service, wheel rebuild with new rims, hub overhaul and the company will be owing you Seriously with the number of commuting miles on a bike the secondhand value is substantial less than an only used twice hobby that didn't suit bike. Or at least that's what the tax man should accept :roll: -_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_
Mongoose Teocali
Giant STP0
Why are MTB economics; spend twice as much as you intended, but only half as much as you wish you could afford? :roll:0 -
I've had two bikes on the scheme and each time I've paid £50 at the end of the 12 months and ownership has been transferred to me.
And now it's time for number 3.
Let's face it...no company wants to be left with shedloads of bikes that people won't pay the nominal fee for. So they let them go 'cheap'. Tax man is happy as it's not seen as a benefit in kind and the company are happy as they don't need to store and try and sell a bike.
I've never had any issue with the scheme and I don't know anyone who's paid more than £50 at the end of the scheme.Whyte 905 (2009)
Trek 1.5 (2009)
Specialized Stumpjumper FSR Comp (2007)0 -
tarquin_foxglove wrote:cee wrote:no...fmv for a year old bike will be different for two people. If I ride mine everyday....but you only ride yours 50% of the time...then my fmv will be lower than yours. simple. your company have valued your bike (perhaps just by sticking a finger in the air and pulling 9 out of somewhere but hey) at 9%.
You countered....they said provide proof...sounds fair to me.
I don't mind providing proof but I would feel more confident if that proof was based on something concrete.
Can't be as simple as getting the LBS to state its worth as 5% of the voucher price.
it is that simple....get the lbs to provide you with a quote, of how much it would cost to return the bike to mint condition......then minus that amount from the new price of your bike....
proof of current value.Whenever I see an adult on a bicycle, I believe in the future of the human race.
H.G. Wells.0 -
cee wrote:it is that simple....get the lbs to provide you with a quote, of how much it would cost to return the bike to mint condition......then minus that amount from the new price of your bike....
proof of current value
Excellent idea & as it is simple enough for me to understand then my LBS should be all over it.
You'd think it would make sense if HMRC, Cyclescheme etc gave that as a definition of "FMV" in the terms & condtions.
Cheers0 -
cee wrote:tarquin_foxglove wrote:cee wrote:no...fmv for a year old bike will be different for two people. If I ride mine everyday....but you only ride yours 50% of the time...then my fmv will be lower than yours. simple. your company have valued your bike (perhaps just by sticking a finger in the air and pulling 9 out of somewhere but hey) at 9%.
You countered....they said provide proof...sounds fair to me.
I don't mind providing proof but I would feel more confident if that proof was based on something concrete.
Can't be as simple as getting the LBS to state its worth as 5% of the voucher price.
it is that simple....get the lbs to provide you with a quote, of how much it would cost to return the bike to mint condition......then minus that amount from the new price of your bike....
proof of current value.
I don't think it works like that. FMV is a valuation of what the bike is worth as it stands at the end of the hire period (not after servicing or overhaul).0 -
Monkeypump wrote:cee wrote:tarquin_foxglove wrote:cee wrote:no...fmv for a year old bike will be different for two people. If I ride mine everyday....but you only ride yours 50% of the time...then my fmv will be lower than yours. simple. your company have valued your bike (perhaps just by sticking a finger in the air and pulling 9 out of somewhere but hey) at 9%.
You countered....they said provide proof...sounds fair to me.
I don't mind providing proof but I would feel more confident if that proof was based on something concrete.
Can't be as simple as getting the LBS to state its worth as 5% of the voucher price.
it is that simple....get the lbs to provide you with a quote, of how much it would cost to return the bike to mint condition......then minus that amount from the new price of your bike....
proof of current value.
I don't think it works like that. FMV is a valuation of what the bike is worth as it stands at the end of the hire period (not after servicing or overhaul).
im not saying that this is how the inland revenue would value your bike, but this is a method of valuing a bike....i.e the value of the bike at the end of the hire period, can be argued to be the full price of the bike, less the cost to make it a minter again.
definitive doesn;t matter...he only want to get his works quote down from 9% to 5%.Whenever I see an adult on a bicycle, I believe in the future of the human race.
H.G. Wells.0 -
cee wrote:it is that simple....
get the lbs to provide you with a quote, of how much it would cost to return the bike to mint condition......
then minus that amount from the new price of your bike....
equals proof of current value
Update...
LBS provided an estimate of current value based on the above method. It was submitted to work, who checked with cyclescheme & my offer was accepted.
Cheers Cee for offering a simple solution (and one which was acceptable to everyone) to a daft problem.0 -
If you read all the paper work before signing it you would have known this.....DaZeD aNd CoNfUsEd....0
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tarquin_foxglove wrote:cee wrote:it is that simple....
get the lbs to provide you with a quote, of how much it would cost to return the bike to mint condition......
then minus that amount from the new price of your bike....
equals proof of current value
Update...
LBS provided an estimate of current value based on the above method. It was submitted to work, who checked with cyclescheme & my offer was accepted.
Cheers Cee for offering a simple solution (and one which was acceptable to everyone) to a daft problem.
no worries tarquin_foxglove. ultimately, the whole thing is a massive grey area...inland rev don't really want to think about it, or they would have to remove the scheme!
Im sure there are a further 50 ways to actually value bikes, plus 50 definitions of exaclty what constitutes FMV. None of that really matters....as long as the evidence you provide is accepted by your company...then everyone is happy.Whenever I see an adult on a bicycle, I believe in the future of the human race.
H.G. Wells.0
