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Cyclescheme Changes to fair Value

kingrollokingrollo Posts: 3,163
edited October 2010 in Road beginners
When do the changes start ?

And could they be applied retrospectivley - I used to work for the revenue - and this may not be as daft as it first sounds - as FMV was never stated - or agreed - you just paid whatever you were told - or returned the bike.

So if your FMV was 5% - but is now judged to be 30% - you could quite feasibly be asked to pay the difference, regardless on when you 'purchased' the bike.
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  • bails87bails87 Posts: 12,998
    The changes start now.

    how could your FMV have previously been one value, and now changed? If you haven't reached the end of the hire period then the FMV can't have been set, so it can't change, surely?

    I think if you've already finished the salary sacrifice period and paid the transfer fee, then you're ok. But if you haven't made he final payment yet, they could say it's, for example, 30%. You wouldn't necessarily have to pay 30% though. But if on a £1k bike the FMV was 30%, you could pay £50, then pay tax on the remaining £250 'benefit'.
    MTB/CX

    "As I said last time, it won't happen again."
  • amaferangaamaferanga Posts: 6,789
    My understanding is that the Inland Revenue could if they wanted chase people up who've already completed the scheme, but it seems unlikely that they will.

    As for the new FMV - well my employer has dealt with it by reducing the monthly payments so that we pay a final payment of 25%, but ultimately end up paying in total pretty much what we would have done with the 10% FMV.
    More problems but still living....
  • Whereas my employer has decided that 18 and 25% transfer fee will apply with no concessions.

    My question is though: Is it compulsory for me to pay this?

    eg: as above, could we "threaten" to not pay the final value fees? Thereby putting them in an awkward position with lots of second hand bikes sat around.
  • thel33terthel33ter Posts: 2,684
    Or... :twisted:

    You could agree with your employer to postpone the fair value payment for a few years, becuase in 5 years time it will be around 2-5% :wink: the new rules don't say anything about that not being allowed.
    And now you know, and knowing is half the battle
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  • The rules haven't changed. HMRC have just clarified what they expect a fair market value to be to stop people taking the p1ss.

    You don't have to pay the final value fee. If you don't pay it the bike remains the property of your company. Also, your company doesn't have to give you the option to pay a final value fee. They could just take the bike off you.
  • rolf_frolf_f Posts: 16,015
    I think the changes can only apply to bikes bought after the changes were announced (April??). Luckily for me, my employer has decided to stick with the old system until the end of September - and September is when I can get a new voucher!

    Mind you, the bike will have done many thousands of miles by this time next year so it would be hard to value it over the 5% anyway.......
    Faster than a tent.......
  • CiBCiB Posts: 6,098
    The changes don't start - they're clarifications and apply retrospectively, hence the uproar.

    Ultimately no-one has to buy the bike. It's an optional final payment to buy the bike, so in theory at least your employer can't force you to pay. By dragging it out for a year and eventually saying 'Oh ok then I'll buy it', it's now two years old and not worth as much.
  • And i thought that the [email protected] in charge wanted us all on our bikes to save the planet. Can this be the realistic end of the all the various cycle/bike2work schemes or is it still a good deal
    Confused :?:
  • amaferangaamaferanga Posts: 6,789
    My employer made it clear from the start that you either pay the FMV and get the bike or you pay the same amount as a disposal charge. I'm surprised more employers don't do this to ensure they don't end up with a load of bikes.
    More problems but still living....
  • amaferanga wrote:
    My employer made it clear from the start that you either pay the FMV and get the bike or you pay the same amount as a disposal charge. I'm surprised more employers don't do this to ensure they don't end up with a load of bikes.
    How could they possibly enforce that policy?!? it's not the employees problem to dispose of company assets.

    Indeed, I had thought that quite the opposite applied, otherwise I'm sure there would be a lot of people here trying to buy old laptops etc for virtually nothing, but we're told that this isn't allowed for tax reasons.
  • amaferangaamaferanga Posts: 6,789
    rich164h wrote:
    amaferanga wrote:
    My employer made it clear from the start that you either pay the FMV and get the bike or you pay the same amount as a disposal charge. I'm surprised more employers don't do this to ensure they don't end up with a load of bikes.
    How could they possibly enforce that policy?!? it's not the employees problem to dispose of company assets.

    They can enforce it because employees sign to say they accept the terms of the hire agreement. If someone doesn't like it they don't care and the fact is it doesn't put people off anyway.
    More problems but still living....
  • thel33terthel33ter Posts: 2,684
    That's great, I'll 'dispose' of all the bikes that are left with the company for £10 a bike 8)
    And now you know, and knowing is half the battle
    05 Spesh Enduro Expert
    05 Trek 1000 Custom build
    Speedily Singular Thingy
  • markos1963markos1963 Posts: 3,724
    Well if all this does go ahead I think I'm actually going to be out of pocket by this whole scheme. My employer even though they are VAT registered never passed back the VAT saving to us AND they charged us a setting up charge as well. If I have to pay a 30% final value charge as well all the savings from the scheme have gone. I could have saved more by negotiating a discount from my LBS :(
  • TommyEssTommyEss Posts: 1,855
    My scheme just ended and I was charged 5% voucher value plus VAT at 17.5% - or exactly as I was expecting..

    We were charged £12.50 Third Party Insurance at the start, which I kicked up a fuss about to no avail (combined with my home insurance and my British Cycling Insurance, I reckon I was covered 3x for Third Party - but it wasn't optional - gits!)
    Cannondale Synapse 105, Giant Defy 3, Giant Omnium, Giant Trance X2, EMC R1.0, Ridgeback Platinum, On One Il Pompino...
  • I made the choice not to enter the scheme at work folowing the election - it always seemed an obvious target for cuts to me. Consequently I have been scouring the second hand market for a bike instead and am convinced that prices will inevitably rise as more people go down that route as opposed to C2W.
  • TommyEss wrote:
    My scheme just ended and I was charged 5% voucher value plus VAT at 17.5% - or exactly as I was expecting..

    We were charged £12.50 Third Party Insurance at the start, which I kicked up a fuss about to no avail (combined with my home insurance and my British Cycling Insurance, I reckon I was covered 3x for Third Party - but it wasn't optional - gits!)

    So did mine, and that was my agreement as well.

    Except because the payment is scheduled to be taken out of my salary this month, even though we agreed that rate in August before the new "clarifiaction" rules, I've been told I am subject to the new rule and the agreement we had had been ripped up
    My blog: http://www.roubaixcycling.cc (kit reviews and other musings)
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  • TommyEssTommyEss Posts: 1,855
    Ours transferred ownership back to Cyclescheme, who emailed me a link to make the final payment online. Was a very quick and painless procedure, and lets you print off the transfer of ownership sheet etc.
    Cannondale Synapse 105, Giant Defy 3, Giant Omnium, Giant Trance X2, EMC R1.0, Ridgeback Platinum, On One Il Pompino...
  • jairajjairaj Posts: 3,009
    I don't fully understand how the final fair market value payment can be regulated?

    So if your employer chooses to keep ownership of the bike, then you make no extra final payment. Presumably they can do what ever they want with the bike as its their bike?

    So if they decide decide to donate it to a charitable cause ie You, it there anything stopping them from doing so?
  • bompingtonbompington Posts: 7,674
    jairaj wrote:
    So if they decide decide to donate it to a charitable cause ie You, it there anything stopping them from doing so?
    Of course, and my boss gives me a birthday present of £30K in cash every year instead of a salary
  • amaferangaamaferanga Posts: 6,789
    jairaj wrote:
    I don't fully understand how the final fair market value payment can be regulated?

    So if your employer chooses to keep ownership of the bike, then you make no extra final payment. Presumably they can do what ever they want with the bike as its their bike?

    So if they decide decide to donate it to a charitable cause ie You, it there anything stopping them from doing so?

    I'm sure they could do this if you set yourself up as a registered charity :roll:

    The Taxman isn't stupid.
    More problems but still living....
  • redvisionredvision Posts: 2,877
    edited September 2010
    :?
  • TommyEssTommyEss Posts: 1,855
    I would keep quiet about only having bought accessories (since you're supposed to buy a whole bike), keep your head down, and see what happens in March.
    Cannondale Synapse 105, Giant Defy 3, Giant Omnium, Giant Trance X2, EMC R1.0, Ridgeback Platinum, On One Il Pompino...
  • redvisionredvision Posts: 2,877
    edited September 2010
    :?

    (removed posts - better safe than sorry!)
  • TommyEssTommyEss Posts: 1,855
    That's not part of the Bike to Work scheme, whether you've got a bit of paper saying so or not. The scheme is there to loan a bicycle or bicycles AND safety equipment, not safety equipmenet/clothing alone.

    All I'm saying is, if the tax man takes a close look at your scheme, he will probably find you're in breach of the scheme, and thus liable for all the tax you've saved.

    And to that end, I wouldn't be talking about it on a public forum.

    EDIT - Of course, there is a chance that your scheme hasn't actually been set up to take advantage of the HMRC Bike to Work Scheme, in which case none of the above is true - though not sure how or why your employer would offer to pay your tax for you, and then again, surely what you're getting is a benefit in kind which would be liable for taxation?
    Cannondale Synapse 105, Giant Defy 3, Giant Omnium, Giant Trance X2, EMC R1.0, Ridgeback Platinum, On One Il Pompino...
  • curiumcurium Posts: 815
    My employer says that I need to get a valuation from a bike shop to get the fair market value.

    It's a 2009 tricross sport with a few scrapes and scratches from 2 crashes... What do you reckon it's worth?
  • amaferangaamaferanga Posts: 6,789
    curium wrote:
    My employer says that I need to get a valuation from a bike shop to get the fair market value.

    It's a 2009 tricross sport with a few scrapes and scratches from 2 crashes... What do you reckon it's worth?

    Dunno, but if you've got or could borrow some old, rusty bike bits I'd stick them on the Tricross before you take it for its valuation.
    More problems but still living....
  • top_bhoytop_bhoy Posts: 1,424
    I wasn't in the UK when the cycle to work scheme was introduced but is it that much of a benefit when you get little or no discount of the purchase price, pension contributions are reduced, the final value is an unknown variable which isn't fixed and could be fairly substantial, etc...

    The only thing going for it I think is that it effectively a HP agreement and allows payment in installments. Right or wrong, like most things tax related, it is the richest who benefit the most.
  • CiBCiB Posts: 6,098
    Top_Bhoy wrote:
    like most things tax related, it is the richest who benefit the most.

    Well state the bleeding obvious why don't you? Higher rate tax payers will benefit more as tax benefit is also at the higher rate. Unless you want to increase the administration of a simple scheme by an order of magnitude just to prevent the awful nightmare of higher rate ta-payers getting a reciprocal benefit, that's how it works. You pay 40%, you get a reduction at that 40%. Not really a big problem is it? Really?
  • mrolimroli Posts: 3,622
    And if it stops top tax bracket payers from commuting in stupid range rovers, I'm all for it...
  • top_bhoytop_bhoy Posts: 1,424
    CiB wrote:
    Top_Bhoy wrote:
    like most things tax related, it is the richest who benefit the most.

    Well state the bleeding obvious why don't you? Higher rate tax payers will benefit more as tax benefit is also at the higher rate. Unless you want to increase the administration of a simple scheme by an order of magnitude just to prevent the awful nightmare of higher rate ta-payers getting a reciprocal benefit, that's how it works. You pay 40%, you get a reduction at that 40%. Not really a big problem is it? Really?

    A tad sensitive and a bit of an over reaction....somebody got out of bed the wrong side today.
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