C2W as a contractor

rubix

A a contractor we dont get the cycle to work scheme

I do run my own limited company that is VAT registered - has anyone in the same situation been able to achieve C2W

cee

AFAIK, you have to pay tax through the PAYE system to take part in the scheme.....

I suspect most contractors and otherwise self employed probably don't. so...probably not.

Your company could buy the bike as an asset and claim the VAT back though....so some savings could still be made.

google has loads of results under self employed cycle to work....although some of it is conflicting!

TheStone

Not C2W.
Your Ltd company just buys the bike and it's depreciated over 3 years.

Works out about the same saving.

wgwarburton

rubix wrote:

A a contractor we dont get the cycle to work scheme

I do run my own limited company that is VAT registered - has anyone in the same situation been able to achieve C2W

You are claiming mileage allowance arn't you?

I wouldn't have thought you could do both- if the company is supplying a bike, you can't claim mileage for running your own, surely?

I would think that the allowance for mileage would be a better deal than C2W, assuming you do a reasonable distance... at 20p/mile a 30 mile/week commute would be worth well over £250 "tax-free", which is better than most are seeing on C2W isn't it?

I am not a tax-accountant... that may be obvious!

Cheers,
W.

TheStone

Not sure if you can also claim mileage. I'd doubt it, but if you pay normal tax, there's still
a lot of saving.

A bike will end up about half price (including vat, corp tax and divd tax saving).

Headhuunter

I was in a bike shop a while back and some woman there was talking this through with one of the other shop assistants, she was trying to work out a way to get C2W as a contractor/self employed person and there didn't seem to be any way to do it...

RufusA

As cee suggested.

I'm a contractor with my own Ltd company. My company bought a company bike for each employee to use (all two of them).

Company paid for safety equipment (lights, panniers, helmet etc.) and also pays for maintenance of the bikes.

That was nearly three years ago, and perhaps the company will replace the bikes, and offer the old bikes for disposal to the employees at fair market value ;-)

There is no need for salary sacrifice, and no need to worry about the £1k limit for consumer credit as you are not "loaning" the bike, just maintaining a company bike pool for all employees to use.

Company wise you can claim the VAT back, and write the capital down as depreciation against profit. The exact savings achieved depends on how you usually distribute excess money in the company i.e. Bonus attracting higher rate tax and NI, dividends or just hold for a rainy day. Savings are reduced if company takes part in the flat rate vat scheme.

Same rules apply that main purpose of bicycle has to be commuting or business use.

My accountant congratulated me on my inginuity!

HTH - Rufus

Mikelyons

RufusA wrote:

As cee suggested.

I'm a contractor with my own Ltd company. My company bought a company bike for each employee to use (all two of them).
HTH - Rufus

I'm also a contractor - but went the regular C2W route using Evans even though I'm the only employee. My company is also registered for VAT flat rate scheme, so saving was reduced as the company could not reclaim the VAT.

At the end of the year , I wrote a memo transferring ownership of bike to myself without any final payment. After all company's costs had been covered and they did not lose financially,

Mike

daviesee

From historical e-mails with my accountant:-

"I was looking at the Inland Revenue's CD to see what benefits can be claimed and found this:-

http://www.dft.gov.uk/pgr/sustainable/c ... 732?page=1

As I am thinking of cycling to work Tuesday to Thursday and could do with a new bike I thought that I could take advantage of this.

As I will not be deducting any wages or applying any charges it will be a loan bike and not a hire bike under the cycle to work scheme and as such I am under the impression that no limits or conditions should apply.

Reply

If a company lends the bike to an employee there is no taxable benefit, nor any employers or employees national insurance. The benefit of the bike does not have to be reported on a P11D provided that it is used mainly (more than 50%) for qualifying journeys. A qualifying journey would be home to work, and return and there would be no requirement to keep records of journeys unless there is something to suggest that it will be used less than 50% for qualifying journeys.

Therefore provided the cycling to work Tuesday to Thursday will be more than 50% of the use of the bike, there are no catches to the company buying a bike for David to use. It can also provide him with cycling safety equipment."

I am on the flat rate scheme and as the total bill was over £2000 for bike and gear I could claim back the VAT, making it desirable to spec up to break the £2000 mark :P
I now have a quality bike and safety gear all bought through the company, saving me money and it can be replaced again, once the 3 years are up!

The only catches are that you have to give all employees access to the bike (no problem ) and you can't claim mileage.

Go for it!

Edit:- Meant to add, on designated cycle to work days you can provide your "employees" with a free breakfast. No receipts required for anything under £10 remember

After what our MP's claim on expenses it seems to be the least I could do :twisted:

cee

Mikelyons wrote:

RufusA wrote:

As cee suggested.

I'm a contractor with my own Ltd company. My company bought a company bike for each employee to use (all two of them).
HTH - Rufus

I'm also a contractor - but went the regular C2W route using Evans even though I'm the only employee. My company is also registered for VAT flat rate scheme, so saving was reduced as the company could not reclaim the VAT.

At the end of the year , I wrote a memo transferring ownership of bike to myself without any final payment. After all company's costs had been covered and they did not lose financially,

Mike

hmmm...interesting stuff...

Do you pay tax using the PAYE system? If not, how did you make the salary sacrifice?

curlew

In response to the original post, another contractor here with own ltd company who has 'set up' their own C2W scheme. It worked for me as i declare all of the company's income as caught by the 'personal services' (IR35) regulations & it therefore needs to be treated for tax purposes as 'employment income' (ie subject to PAYE & NI contributions). Therefore anything that reduced my gross pay was a good thing - i therefore also 'set up' my own childcare voucher scheme (when my daughter was at nursery/after school club)

if you're an 'old-school' contractor who still pays divis and a nominal salary to maintain entitlement to state benefits then i can't see the point of doing a salary-sacrifice arrangement, it would be better for the company just to operate a 'bike pool' type scheme (as other posters have suggested) which still allows the ltd co to claim the costs of the scheme against profits (thus reducing corp tax bill) & no 'benefit-in-kind' arises to you as the employee as its still a C2W scheme (& you get to use a bike - although it obviously belongs to the company remember!)

in terms of the mechanics, the company (employer) bought the bike directly & then 'agreed' an amount that would be deducted from my salary to recover the cost of running the scheme - in practice this was the purchase price of the bike. when i filed the company's P35 return i just simply deducted this amount from my gross pay (if you use a payroll agent you would tell them how much to deduct in salary sacrifice)

the scheme has been used to buy 2 bikes (both 2nd hand from private sellers) about 18 months apart as bike #1 fell to bits after a while!!! i just got the seller to sign a receipt with the description of the bike/amount paid/seller's personal details so i've got a record

as i've said bike #1 is knackered & has no resale value, so i've 'agreed' with the company that i can use bits of it to fix the bits of bike#2 that are now falling apart!!! bike#2 still belongs to the company but we've 'agreed' that i still need to use it for cycling to work & they're OK with me still using it but no further charges apply (for the time being!!!)

as far as i know, you don't need to alert HMRC that you're planning to start a C2W scheme although i guess large organisations do this to manage the risk of them cocking things up.

feel free to PM me if you have further questions about this

rubix

thanks for your replies guys esp interesting regarding the 2nd hand purchase ability.

I am meeting with my accountant on Saturday and will have a chat

RufusA

curlew wrote:

Therefore anything that reduced my gross pay was a good thing - i therefore also 'set up' my own childcare voucher scheme (when my daughter was at nursery/after school club)

+1 - also don't forget any holiday clubs can also count towards "child care".

Rufus.

gaz545

I was allowed to go on the C2W as a contractor. must be your company rules

gaz545

I was allowed to go on the C2W as a contractor. must be your company rules