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C2W - More Excuses? - anyone heard this one before........

pedromondopedromondo Posts: 11
edited March 2010 in Commuting chat
Like many threads expressing frustration with the C2W scheme our proposed scheme has been in the offing for a couple of years. Latest excuse is this (see below - extracted from our work intranet - a large local authority). Anyone have a view on whether or not there is any truth in this and, if there is, WTF is happening with C2W ????? Has anyone else currently benefitting from C2W heard this ?

Cheers

Pete

Cycle to Work scheme progress
The Cycle to Work scheme was finally signed off on 17 December 2009, with a proposed launch date of week commencing 4 January 2010. However, on 18 December HM Revenue and Customs revealed new guidance on both the bus and cycle salary sacrifice schemes. (This was issued without prior consultation or warning).

In order for the scheme to be compliant with tax law, staff who are not eligible to participate in the salary sacrifice scheme (i.e. those under 18 or those below the National Minimum Wage) must be provided with a bike by other means. For smaller organisations this can be dealt with by providing a small bike pool. However with an organisation the size of ours this could prove very difficult and costly.

This new HMRC guidance affects all existing schemes with immediate effect, not just those yet to launch. Devon and Somerset County Councils have suspended their schemes. Work is urgently taking place to rectify this problem. This is very frustrating news for all those who have been working very hard to implement this scheme. Please bear with us whilst we attempt to rectify this.

It is not possible to be specific about a launch date at this time. Further updates will be posted on these webpages
.

Posts

  • AndyMancAndyManc Posts: 1,393
    Maybe they need to put these people in charge of the scheme ?

    http://www.faircare.co.uk/cycle-to-work.php

    .
    Specialized Hardrock Pro/Trek FX 7.3 Hybrid/Specialized Enduro/Specialized Tri-Cross Sport
    URBAN_MANC.png
  • merkinmerkin Posts: 452
    This highlights the fact that the CTW scheme, like most such schemes, should either be available to all or not available at all. There are too many tax incentive schemes that are only available to some taxpayers but if your employer is unwilling or unable to provide the scheme you miss out, despite the fact you pay the same tax burden as everyone else.
    The govt need to do more to make sure these types of scheme are freely available. Probably by making sure they aren't too bureaucratic? :?
  • RufusARufusA Posts: 500
    Sadly it's true. In typical joined up Government whilst DFT has been recently pushing the Cycle to Work scheme, and launched the Cycle To Work Guarantee, the HMRC wishes to limit it.

    As a bit of background the HMRC are concerned about how much NI is being lost to salary sacrifice schemes and are tightening them up across the board! Copied from another site:

    =============================================
    The issue that HMRC drew attention to on 18th December was the condition that bicycles must be 'generally available to all employees', some employers have fallen foul of this condition for three reasons:

    The scheme was not open to employees aged under 18 as they could not enter into the credit sale agreement that facilitates the bicycle being loaned to the employee for a fixed period for a set weekly/monthly amount

    The scheme was only offered as salary sacrifice and certain employees were unable to participate as to do so would have brought their wages below the level of the national minimum wage

    Only employees at certain sites or offices were able to join the scheme

    Enforcing the legislation with immediate effect is interesting not least for the message it sends out, Employers may not want to:

    Arrange for an adult guarantor to allow under 18 year old employees to participate

    Offer lower value bicycles or the loan of a ‘pool’ cycle to low paid employees with insufficient pay

    Extend the scheme to all its sites because of the cost of administering more participants

    HMRC said in their statement that any agreements entered into before 18th December 2009 would be allowed to continue unaltered until the end of the employee’s loan agreement but any subsequent agreements would not be considered as tax exempt unless the scheme rules weresuch that the “generally available” condition was met in full. Where cycle to work agreements were entered into after 18th December or were have to come into effect after 6th April 2010 and the tighter conditions were not met, the employee has received a taxable benefit that must be reported on the P11D and be subjected to Class 1A NICs.

    =========================================

    If I was an employer, given the hassle / cost of meeting the requirements, if I had any NMW employees or those under 18, I wouldn't bother with the scheme.

    Rufus.
  • Presumably then this will effect all salary sacrifice schemes, for example the nursery vouchers scheme?
  • RufusARufusA Posts: 500
    Presumably then this will effect all salary sacrifice schemes, for example the nursery vouchers scheme?

    Going off topic, but this doesn't seem to impact childcare vouchers, in fact they specifically state that for Child Care Vouchers:

    http://www.hmrc.gov.uk/helpsheets/e18.pdf

    Available to all staff — the childcare support should be offered in a
    scheme in which all employees are eligible to participate. The ‘available to all’
    condition is not breached where workers who earn on or near the National
    Minimum Wage (NMW) are unable to join an employer’s scheme due to the
    requirement to safeguard payment of the NMW in full.

    Also it doesn't have to at all locations:

    "locations...where the scheme operates."

    A cynic may suggest that cycle scheme costs the gov so should be stamped out, but childcare vouchers mean more people working and hence extra tax, so should be encouraged!

    Rufus.
  • ExeterSimonExeterSimon Posts: 830
    pedromondo wrote:
    Like many threads expressing frustration with the C2W scheme our proposed scheme has been in the offing for a couple of years. Latest excuse is this (see below - extracted from our work intranet - a large local authority). Anyone have a view on whether or not there is any truth in this and, if there is, WTF is happening with C2W ????? Has anyone else currently benefitting from C2W heard this ?

    Cheers

    Pete

    Cycle to Work scheme progress
    The Cycle to Work scheme was finally signed off on 17 December 2009, with a proposed launch date of week commencing 4 January 2010. However, on 18 December HM Revenue and Customs revealed new guidance on both the bus and cycle salary sacrifice schemes. (This was issued without prior consultation or warning).

    In order for the scheme to be compliant with tax law, staff who are not eligible to participate in the salary sacrifice scheme (i.e. those under 18 or those below the National Minimum Wage) must be provided with a bike by other means. For smaller organisations this can be dealt with by providing a small bike pool. However with an organisation the size of ours this could prove very difficult and costly.

    This new HMRC guidance affects all existing schemes with immediate effect, not just those yet to launch. Devon and Somerset County Councils have suspended their schemes. Work is urgently taking place to rectify this problem. This is very frustrating news for all those who have been working very hard to implement this scheme. Please bear with us whilst we attempt to rectify this.

    It is not possible to be specific about a launch date at this time. Further updates will be posted on these webpages
    .

    No they haven't.
    Whyte 905 (2009)
    Trek 1.5 (2009)
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  • Eau RougeEau Rouge Posts: 1,118
    Just how many people does the Council employ that are under 18 or only earning minimum wage? Neither group jumps into mu head when I think "council employee"
  • ceecee Posts: 4,553
    Eau Rouge wrote:
    Just how many people does the Council employ that are under 18 or only earning minimum wage? Neither group jumps into mu head when I think "council employee"

    ++
    Whenever I see an adult on a bicycle, I believe in the future of the human race.

    H.G. Wells.
  • Cheers for the replies - especially RufusA.

    As quite a large local authority (we employ c40,000 people - for the time being at least !!!) so there are bound to be a fair few who fall under the net and so need to be covered by other means. I just wondered whether this was widespread or not. Looks like it may be and I may have to forget about ever getting a bike under C2W.

    By "no they haven't" does this refer to the Devon and Somerset schemes ? If it is the case these have not been suspended then they may have found a way round it. Any chance you could elaborate a little Exeter Simon?

    Thanks again.

    Pete
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