Slightly different CycletoWork Scheme Question

johnboy_78

My employer is just about to launch the next round of its CycletoWork scheme (the Halfords one....) and I had decided that I would use the £1k voucher to purchase a Boardman FS Team later this month.

However, the scheme rules have now changed (due to HM Revenue and Customs altering the tax break rules) and now the final payment to keep the bike aftwer 12 months (for any bike >£500) is 25%. Taking this into account means that (for me at least) I would end up paying £850 for a £1000 bike. Granted this is still a saving of £150, but it does start to open up the question of whether I would be better to simply go out and buy a sale bike at £850 from another retailer and ultimately end up with a £1000+ for the same outlay as the CycletoWork scheme would provide.

So, any views on my logic, and has anyone spotted any good full suspension (xc/trail)bike deals for around £800-£1000?? :-)

Thanks in advance.

John

jayson

With the govt changing the rules it does seem as u say like a better idea to actually save up a few quid and buy a bike off ur own back, u can get pretty much the same discount as on the c2w scheme if ur good but u get much more choice and ur not limited to any one shop.

If u can stretch ur budget another £100 then THIS Pinnacle 2.0 is a good buy at £1100.

tarquin_foxglove

Ask your work can you either:

- delay the final payment.

The HMRC table says...

Age of cycle Original price £500+
1 year ...... 25%
18 mths ...... 21%
2 years ...... 17%
3 years ...... 12%
4 years ...... 7%
5 years ...... 2%
6 years+ ...... Negligible

So waiting a couple of years reduces the cost.
or,

- Pay a nominal amount & then be liable for the taxable benefit.

The employer could continue to charge whatever it wants to transfer ownership and then you are liable for tax on the difference; so say a £1000 bike @ 25% = a HMRC approved £250 Fair Market Value, you pay £50, and then get taxed on the benefit of the £200 saving which, depending on your tax band, would add a further cost of say £40 or £80.

warrerj

has his been confirmed ???

I was told it wasn't yet iconfirmed.

gregster10217

Does anyone know, if this has been confirmed, whether it only affects new C2W schemes, or ones already in existence. Mine is due to finish in a couple of months and will be pi**ed off if they do it for current schemes.
Have to say that I won't be doing another one if the new end of scheme purchase prices do come into force. Does't make it worthwhile anymore, and as has been said, you can probably get as much/more discount at a LBS, or in a sale.

warrerj

Yep. ADD a 25% final payment and you could get a better deal by walkign into a shop with a wad of cash.

The LBS have to pay the scheme 10% so there's 10% to play with to start plus the normal margin you can get off a bike. Depending on your tax bracket and who you work for you could end up only gettign 10%-15% off the bike.

tarquin_foxglove

gregster10217 wrote:

Does anyone know, if this has been confirmed, whether it only affects new C2W schemes, or ones already in existence. Mine is due to finish in a couple of months and will be pi**ed off if they do it for current schemes.

The scheme hasn't changed, all that has happened is HMRC have given guidance on the minimum FMV at the end of the hire period to avoid incurring a taxable benefit.

It is up to your employer how they deal with it.

bails87

Even if the bike was valued at £250 you don't have to buy it. You can keep using it, without paying any more.

And then if you did want to buy it you could pay (for example) £30. Then you'd be deemed to have received a benefit of £220 (£250-£30), so you'd be liable to pay tax on £220 (~£50)

You'll struggle to get a better bike than the Boardman for £850 (which you wouldn't necessarily pay anyway). Look at the scheme as interest free credit, with a 15 to 40% discount..

johnboy78

There's a new added twist to my dilema.

I had been thinking along the lines of "bails8y"'s post above that even at £850 the Boardman is a steal. However, my employer has decided to vary this round of the scheme to use LBS of which Halfords is not included. So, no access to Boardmans anymore....

Back to the original dilema of whether to use the scheme to buy a bike (£1000 bike for £850) or find a sale bike at a LBS and get a deal that way.......

Oh and it looks as if my employer won't entertain the option of continuing the lease period beyond the 12 months to allow the FMV of the bike to fall below 25%!