Cycle to Work Scheme - emplyer taking the piss?

soy_sauce

check your T&C document, it should have stated there.

I got mine a couple of year ago and it stated 5% on my original T&C, then by the end of my hire period my company was asking for 6% because that was stated on the T&C for following year scheme.

at the end, i only paid the 5% because i had that original T&C to prove it and that what i agreed with when i signed up.

from my understanding, the final payment is "pocket" by the scheme company.

alfablue

I think the fair market value is the bike's net worth, not a retail price, so there should be no profit, and the fmv will actually be a lot less than many think. On a similar thread I posted an Evans document describing the valuation of such bikes, and a well used commuter bike may only be worth 5% of the purchase price after 1 year. If you are worried about individual fmv assessments, then the answer is not to clean or maintain the bike (and maybe do a bit of damage)

Radioactiveman

Or pick a piece of scrap out of the canal and present that

owenlars

It's really simple, the charge is one of the means to ensure that the Treasury's rules on benefit in kind and lease/hire purchase schemes are not broken. It is a device, nothing more nothing less, used to meet regulations. The rules are also clear and unambiguous. You pay for the bike before tax and NI deductions and if your company is generous they can also give you the VAT back. A saving of around 25% to 50% depending on circumstances. What's not to like even with a 15% charge at the end?

I submit that given a tax system which is patently over complex and cumbersome it would be very difficult to devise something within the rules which gave most to those who needed it most. Unless of course something like a blanket VAT rate of 0% was applied to all bicycles (as it is to children's clothes, newspapers and takeaway food). This of course would make some benefit available to all but reduce the benefit to most of the people who will use or have used the current cycle scheme. Also those with a lot would get exactly the same as those with a little.

Go figure which is best.

fenboy369

What happens if the bike is stolen the week before you have to hand it back? Whats its Fair Market Value then?

alfablue

fenboy369 wrote:

What happens if the bike is stolen the week before you have to hand it back? Whats its Fair Market Value then?

it is the employers property, you are responsible for it. In practice, you keep quiet, pay the fmv (assuming you still had it), then promise yourself to get the bike insured next time, like they told you to.

bails87

Then you owe your employer a bike

Gazzaputt

Wamas wrote:

Three of us who cycle to work asked if we could have a shower installed, the MD said sure, at a cost of £7k.

7k for a shower :shock: ??

MrChuck

Just to play Devil's advocate for a minute, I don't necessarily agree with rake but I see a bit where he's coming from. There are a lot of posts on here that forget that the scheme exists to provide more encouragement for drivers to get out of their cars, not provide keen cyclists with shiny new toys at knockdown prices.

That said, I agree that going from 5% to 15% seems a bit counterproductive, although I can't see the employer making much money from it- I'd have though most people will only spend a few hundred punds, so what does their extra 10% get them?

owenlars

fenboy369 wrote:

What happens if the bike is stolen the week before you have to hand it back? Whats its Fair Market Value then?

You insure it you get whatever you agree with the insurance company, you pay outrstanding monthly payments plus the end charge and you keep the balance.

rake

crimsondynamo wrote:

I have to say the uncertainty inherent in this scheme (compounded if you don't entirely trust your employer), prevented me or any of my former colleagues for taking "advantage" even though a scheme was technically in place.

Would a simpler and fairer way of doing it not be to make complete bikes <£1k vat free, with individual components and bikes >£1k at half VAT?

i came to that conclusion as well. Foad your usage is sanctioned ok by me its within the purpose of the scheme and frees the rush hour up a little more.maybe thats why they didnt make all bikes vat free for leisure riders. i suppose afablue didnt see fit policing MP's expenses. it makes no difference to anyone else.your standards are slipping.

alfablue

rake wrote:

i suppose afablue didnt see fit policing MP's expenses. it makes no difference to anyone else.

UH??????????????????????????

I think there is an ill informed dig in there, which attempts to juxtapose a completely unrelated issue, but your writing is really difficult to understand, so I'm not quite sure what your point is (if there is one) :? Can you try again?

stevie63

Earlier in the thread someone asked if a £1000 bike is sold to the staff member at the end of the scheme for £500 are they liable to report the profit to HRMC. The answer is no, in actual fact it will go down as a £500 loss (£250 as capital write down in the first year and a further £250 when they sell it) The fact is that another atractive feature of C2W is that it reduces your companies tax liability for the year (assuming they are making profit).

FOAD

MrChuck wrote:

Just to play Devil's advocate for a minute, I don't necessarily agree with rake but I see a bit where he's coming from. There are a lot of posts on here that forget that the scheme exists to provide more encouragement for drivers to get out of their cars, not provide keen cyclists with shiny new toys at knockdown prices.

That said, I agree that going from 5% to 15% seems a bit counterproductive, although I can't see the employer making much money from it- I'd have though most people will only spend a few hundred punds, so what does their extra 10% get them?

Way off...

Out of 89 people who took up the scheme last April with my company, 70 took the full £1,000. So last month when we were charged 5%, my employer made a sweet £3,500 plus whatever the other 19 had to pay.

Next year off the same numbers they would make at least £10,500.

I still can't fathom how you can be charged again for something you have already paid for in full. Each month I was docked about £72 before tax, so approx £864 with the remainder being covered by the VAT refund anyway.

alfablue

FOAD wrote:

MrChuck wrote:

Just to play Devil's advocate for a minute, I don't necessarily agree with rake but I see a bit where he's coming from. There are a lot of posts on here that forget that the scheme exists to provide more encouragement for drivers to get out of their cars, not provide keen cyclists with shiny new toys at knockdown prices.

That said, I agree that going from 5% to 15% seems a bit counterproductive, although I can't see the employer making much money from it- I'd have though most people will only spend a few hundred punds, so what does their extra 10% get them?

Way off...

Out of 89 people who took up the scheme last April with my company, 70 took the full £1,000. So last month when we were charged 5%, my employer made a sweet £3,500 plus whatever the other 19 had to pay.

Next year off the same numbers they would make at least £10,500.

I still can't fathom how you can be charged again for something you have already paid for in full. Each month I was docked about £72 before tax, so approx £864 with the remainder being covered by the VAT refund anyway.

They also mad £120 per £1000 loaned on NI contributions, so £8400 plus £3500 = £11900 for the 70, plus a sum for the other 19.

mroli

I have just got my final payment request through:

"According to HMRC guidelines and following market research carried out by Halfords, the fair market value is calculated as 5% of the Letter of Collection value, or £20, plus VAT, whichever is greater"

Fair play I feel - £1000 worth of bike for £513 spread throughout the year and a final payment of £50 plus VAT - £570 all in. This surely is a no brainer.

I have no problems with the employer "making" £50 from me when I've just saved over £400 - if that goes towards the costs of them running the scheme and means I can get another bike this year - awesome. My employer has someone doing all the maths, emailing me to tell me when things are up, updating website at work, making adjustments to my payroll etc etc. If you don't like it, join a firm that doesn't operate cycle to work or don't buy a bike!

MrChuck

FOAD wrote:

MrChuck wrote:

Just to play Devil's advocate for a minute, I don't necessarily agree with rake but I see a bit where he's coming from. There are a lot of posts on here that forget that the scheme exists to provide more encouragement for drivers to get out of their cars, not provide keen cyclists with shiny new toys at knockdown prices.

That said, I agree that going from 5% to 15% seems a bit counterproductive, although I can't see the employer making much money from it- I'd have though most people will only spend a few hundred punds, so what does their extra 10% get them?

Way off...

Out of 89 people who took up the scheme last April with my company, 70 took the full £1,000.

Ha, shows what I know then! That's interesting though. Were those 70 already keen-ish cyclists or first-timers getting their first 'proper' bike?

alfablue

i have no problem with the employers making th 5% either, but MrChuck said his employer was increasing this to 15%, and when one considers that they also made 12% on NI and probably 17.5% on vat retainedthis is just profiteering at the employees expense, decent employers wont do this.

I am very happy with the 2 bikes i have had through my employers!,

mroli

Might be worth FOAD putting his employers into contact with Halfords then (and HMRC) to show that a 15% charge is too much. I know my employers will have taken advice on this and not just plucked a figure out of the air.

doyler78

mroli wrote:

Might be worth FOAD putting his employers into contact with Halfords then (and HMRC) to show that a 15% charge is too much. I know my employers will have taken advice on this and not just plucked a figure out of the air.

I doubt Halfords approach would stand up to scrutiny as each bike is supposed to assessed on its own taking into account the condition of the bike as the time of assessment. That's the rules. Does anyone seriously think that the fair market value for a 1 year old (or 18 month old for that matter) bike is likely to be 5% or even 15%?

For instance anyone want this bike? It's the same as mine that I bought under cycle to work.

http://cgi.ebay.co.uk/Scott-CR1-Team_W0 ... 20b04a4086

My organisation paid £1000 for mine and I paid the extra £100 so a retail value of £1100 (and that was its already discouted value) and it has a bid already of £500 so let's assume it goes for that so that is 50% of what my organisation thought I paid or 45.5% of actual retail price paid.

Here's another (the only 2 being sold that I could find).

http://cgi.ebay.co.uk/Scott-CR1-Team-Ro ... 35a85fc925

Look at the current bids on that.

Of course if fair market values were actually charged then the scheme would be dead in the water and the LBS recognise that therefore it is in their interests to severly undervalue bikes for such purposes. It doesn't make it either ethical or legal. The scheme if ran according to the rules would have near zero takeup. Why on earth the Government couldn't come up with some other means of allowing employees to buy bikes cheaply that didn't involve tax evasion. Yes tax evasion. If you don't comply with the rules then you are not entitled to the benefits and if you do take those benefits you are then evading tax. Simple as that.

I'm as much a party to that as anyone else that has used this scheme however I do hate this scheme simply because it just encourages deception. Deception is a prerequisite for making it work and that is so wrong on any level.

Chris James

FOAD wrote:

I still can't fathom how you can be charged again for something you have already paid for in full. Each month I was docked about £72 before tax, so approx £864 with the remainder being covered by the VAT refund anyway.

I understand that under the rules of the scheme you were renting the bike off your employer, not buying it.

So you had no more paid for the bike 'in full' than a long term tenant buys a rented house.

meanredspider

Chris James wrote:

I understand that under the rules of the scheme you were renting the bike off your employer, not buying it.

So you had no more paid for the bike 'in full' than a long term tenant buys a rented house.

I think that the point is that you'd never pay £72 a month to rent a £1000 bike either. It's the equivalent of paying £720 per month in lease-hire for a £10,000 car. This is where the whole scheme can't really be compared to anything else. Just as the residuals are a nonesense in the real-world. This is an incentivised scheme. If it weren't so, it would be much better buying the bike from whomever you like whenever you like. I got my road bike half-price anyway outside this scheme. The scheme though drives demand and incentivises cycling.

kingrollo

crimsondynamo wrote:

I have to say the uncertainty inherent in this scheme (compounded if you don't entirely trust your employer), prevented me or any of my former colleagues for taking "advantage" even though a scheme was technically in place.

Would a simpler and fairer way of doing it not be to make complete bikes <£1k vat free, with individual components and bikes >£1k at half VAT?

I beleive this has been discussed by the tories. Scrap cyclescheme - make all bikes VAT free

rake

FOAD wrote:

MrChuck wrote:

Just to play Devil's advocate for a minute, I don't necessarily agree with rake but I see a bit where he's coming from. There are a lot of posts on here that forget that the scheme exists to provide more encouragement for drivers to get out of their cars, not provide keen cyclists with shiny new toys at knockdown prices.

That said, I agree that going from 5% to 15% seems a bit counterproductive, although I can't see the employer making much money from it- I'd have though most people will only spend a few hundred punds, so what does their extra 10% get them?

Way off...

Out of 89 people who took up the scheme last April with my company, 70 took the full £1,000. So last month when we were charged 5%, my employer made a sweet £3,500 plus whatever the other 19 had to pay.



not too way off. take 70 bikes at £1000 plus say 19 at £500, the employer has to find the initial outlay to buy the bikes which would be £79500. if they had to borrow the money that would generate interest payments.

Chris James

meanredspider wrote:

Chris James wrote:

I understand that under the rules of the scheme you were renting the bike off your employer, not buying it.

So you had no more paid for the bike 'in full' than a long term tenant buys a rented house.

I think that the point is that you'd never pay £72 a month to rent a £1000 bike either. .....

But the OP has signed up to do precisely that. I realise that the only point of the scheme is if the bike is effectively given to the employee at the end of the rental period, but that is not what the actual agreement says.

At least that is my undersatnding of how the scheme works.

Basically I am saying that the OP may have a morally justified compliant but I suspect he would not have a leg to stand on legally.

rake

or a crank to stand on. :shock: :arrow: