Warning about C2W

tarquin_foxglove

drewcole81 wrote:

If you read all the paper work before signing it you would have known this.

and if you'd read the whole thread before posting you would've known that wasn't the problem.

Thewaylander

cee wrote:

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.

Actually not true.

The FMV is defined as the value of the bike a time of sale(this can often vary on accesor)

Any difference you have betweent he value you pay, and the FMV value is then subject to tax if HMRC are looking, which by accounts this year they will be closely.

Gwaredd

Going off on a tangent, but...

...if the bike is hired from your company, then surely the company is responsible for payment of any servicing, tyres, brakes etc etc, just like when we hire a car off Hertz etc. they pay for the upkeep, we pay to hire it.

Or is this in the smallprint too?

Just a thought!

darren555

Final purchase price is generally an extra months payment.

owenlars

ExeterSimon wrote:

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.

Me too I think there's a lot of looking for problems where there are'nt any

supersonic

Gwaredd wrote:

Going off on a tangent, but...

...if the bike is hired from your company, then surely the company is responsible for payment of any servicing, tyres, brakes etc etc, just like when we hire a car off Hertz etc. they pay for the upkeep, we pay to hire it.

Or is this in the smallprint too?

Just a thought!

Yep, in the print: you are liable for upkeep.

Thewaylander

owenlars wrote:

ExeterSimon wrote:

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.

Me too I think there's a lot of looking for problems where there are'nt any

Go read the documentation and do not just rely on your company to protect you. I cover alot of Tax issues for my work and I have had to issue warnings on our cycle scheme as i think it exposes staff and the company to tax assessment risks.

If you have bought a £1000 bike for a payment of £50 or £5 be careful as you could be brought up for income tax on the difference between what you paid and the FMV(fair market value - look at e-bay for a rough idea is one suggestion they make)

The goverment are basiclly phasing this out because of abuse of the system, if you read the documentation and do the maths if you follow the scheme as intended the bikes work out more expensive on the scheme

alfablue

Thewaylander wrote:

owenlars wrote:

ExeterSimon wrote:

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.

Me too I think there's a lot of looking for problems where there are'nt any

Go read the documentation and do not just rely on your company to protect you. I cover alot of Tax issues for my work and I have had to issue warnings on our cycle scheme as i think it exposes staff and the company to tax assessment risks.

If you have bought a £1000 bike for a payment of £50 or £5 be careful as you could be brought up for income tax on the difference between what you paid and the FMV(fair market value - look at e-bay for a rough idea is one suggestion they make)

The goverment are basiclly phasing this out because of abuse of the system, if you read the documentation and do the maths if you follow the scheme as intended the bikes work out more expensive on the scheme

I'm sorry, I don't believe it. Where is your evidence that "the government are basically phasing this out because of abuse" - do you have anything other than gossip? I would be very interested to see anything of substance!

As for FMV, what things sell for on eBay is not in any way definitive of FMV.

supersonic

If I could get month old bikes for 5% in the bike shops I would be extremely happy. Fact is this is more than fair.

tarquin_foxglove

supersonic wrote:

If I could get [12] month old bikes for 5% in the bike shops I would be extremely happy. Fact is this is more than fair.

You aren't just paying the 5% though, you've paid (100%-tax) for the privilege to pay (5%+vat).

El Capitano

From what I can see here's the calculations for my bike:

Cost of Bike & Helmet = £899.94
Income Tax saving = £179.99
NI saving = £84.59
Final cost of Bike & Helmet (after deductions) = £635.36
Total saving = £264.58

So, if I’m presented with a bill of no more than £264.58 at the end of my hire period, then I’ve saved money.

(all the figures were taken from the www.cyclescheme.co.uk employee calculator, which I did at the time of purchase and printed off)

I suppose the annoying thing for me is that I've kept the bike in absolute pristine condition (which I do will all of my bikes TBH). I hope this doesn't go against me if the bike ends up being valued.

supersonic

tarquin_foxglove wrote:

supersonic wrote:

If I could get [12] month old bikes for 5% in the bike shops I would be extremely happy. Fact is this is more than fair.

You aren't just paying the 5% though, you've paid (100%-tax) for the privilege to pay (5%+vat).

True, but the FMV is independant of that.

heez29

El Capitano wrote:

From what I can see here's the calculations for my bike:

Cost of Bike & Helmet = £899.94
Income Tax saving = £179.99
NI saving = £84.59
Final cost of Bike & Helmet (after deductions) = £635.36
Total saving = £264.58

So, if I’m presented with a bill of no more than £264.58 at the end of my hire period, then I’ve saved money.

(all the figures were taken from the www.cyclescheme.co.uk employee calculator, which I did at the time of purchase and printed off)

I suppose the annoying thing for me is that I've kept the bike in absolute pristine condition (which I do will all of my bikes TBH). I hope this doesn't go against me if the bike ends up being valued.

Just give it a good hammering before you take it in and dont clean. Or swap parts with older stuff

El Capitano

heez29 wrote:

Just give it a good hammering before you take it in and dont clean. Or swap parts with older stuff

It's a TT bike (see 2 in my sig). If it's going to be valued, then it might find itself doing a bit of XC beforehand...

alfablue

I think this current paranoia may be something to do with Cyclescheme themselves. Cyclescheme are encouraging employers to transfer ownership of bikes to them for a nominal fee (£1?), and are encouraging them to do so by warning them that each bike's value must be assessed at time of transfer to employee (i.e. lots of hassle). Cyclescheme then value the bike at £100 or £150 (without seeing it) and sell it to the employee, and then trouser more profit - no wonder they were Britain's fastest growing business last year!

As far as I can tell, HMRC is not saying anything different to what we always knew, that if the employee buys the bike for less than FMV then it is a benefit in kind and liable to tax - no big deal there. For example, bike FMV is £150, I pay employer £50, taxable benefit = £100, 20% tax on that is £20, I end up paying £70 all in.

I think Cyclescheme are milking it (fair enough) and everyone running scared (employers, employees, people advising them) is playing into their hands.

HMRC say: "If a cycle is transferred to an employee at a nominal value (say 5 to 10% of the original retail price), then if the market value is higher, the employee will be taxable on the difference." - we always knew this.

TommyEss

Yes, but HMRC have also always suggested that 5% will be a typical FMV price.

tarquin_foxglove

supersonic wrote:

...but the FMV is independant of that.

Absolutely, FMV is the price a willing buyer pays a willing seller.

However I'd argue that in relation to C2W, FMV is the price a willing buyer (having already paid 100% less tax) pays a willing seller (that has already received 100%).

TommyEss

Value does not equal price.

HMRC have already stated what they consider to be a fair market value - it is 5% of the original retail price.

tarquin_foxglove

TommyEss wrote:

Value does not equal price.

Blimey, that has taken me back a few years & has given me a cold sweat thinking about essays on 'value, price & worth'.

Anyway, I'm off to do some work so I still have a W to C2.

cooldad

Sounds like a lot of worry for nothing.

The taxman isn't going to chase after anyone on the scheme, the idea is to get as many people out of cars and fit and healthy.

But the scheme is a bugger to implement, especially for small companies.

My employer, who will remain nameless opted out of the scheme for admin reasons, but anyone who wants a bike can have an interest free loan over the year, paid back as a salary sacrifice. No idea what the legalities are, but in my case bike and accessories came to just under a grand.
Paid on my credit card, so it's my bike, no arguments. They paid me back in full.
Repayments, after tax saving (marginal rate of 40%) are £47 (the amount my salary has reduced by) so the actual cost to me is £564.

I'm smiling. And they are a great company to work for, look after us very well.

Bungalow Bill

Yeah the guys I work for wont let us use the Scheme and I will name them HM Armed Forces, apparently we are not eligible. Damn cutbacks is what I blame it on.

cooldad

Bungalow Bill wrote:

Yeah the guys I work for wont let us use the Scheme and I will name them HM Armed Forces, apparently we are not eligible. Damn cutbacks is what I blame it on.

Seems fair, you get tanks and things to play with.

Bungalow Bill

I use those tanks to blow up roads, as such I need a bike to ride the newly made bomb holes drops and jumps ;-D

cooldad

Roads our way I think you already have

amt27

I don't profess to know much about C2W, I know the VAT and income tax is knocked off, or something like that, anyway that is not the point of my post.

My OH has just started a new job with a large financial services provider, I expected her to be offered C2W along with the loads of other benefits she gets, especially as they are in financial services.

Anyway she isn't offered it, instead they are affiliated with an online retailer and get a quarter off lots of well known brands and 0% finance. A far better scheme IMO.

Thewaylander

Go read the transport department documents on it.

Alpha I find your attitude to my comment fairly insulting. It's my job to know these things, for instance they have already phased out the bus pass travel to work system due to being unable to monitor it (people using the pass on weekend and so on).

And be more aware guys, they pre tax payments taken from you are not payments the're rental costs. This is not a hire purchase. The final price is buying the bike anything before is a rental price

And if in the documentation you have received the company promises to sellt he bike only to you that in itself is a breach of the scheme(though its intention). though the itention is for you to buy the bike the company is in its right to offfer it to whom ever.

The best tax solution is actually if you are on good terms with finance is to not buy the bike, and have them depreciate it to 0 over three years then dispose of the assest to you it will have a net book value of 0 then and there can be no tax issue.

TommyEss

I am half tempted to NOT buy my bike at the end of the scheme just to see what work do with it...

fletch8928

TommyEss wrote:

I am half tempted to NOT buy my bike at the end of the scheme just to see what work do with it...

I toyed with getting a dirt cheap bike on the scheme to do that, but its a waste of my money, could peev of the company and i doubt i would find out what happens to it.

TommyEss

It's more the case that I have a hardtail in my shed and I've used it twice.