putting money towards cycle scheme voucher initial purchase

appy

having just finished my first 18 months of being in the scheme im eligible to have another

having had a nice trek hardtail last time i feel my skill level has got to the point where i would benefit from a full susser short travel like a cube. however the ones i think are suitable are £1400 so.... i know technically you cant put money on top but plenty of places let you.

my question is, will the final value fee be based on the bike being worth £1400 initially or the £1000 voucher? the bike shop will put that the bike was £1000 to purchase on their paperwork

before anyone says interest free credit would be better i dont think i can get credit but do have £500 to put in so can get away with a £900 voucher

appy

ive just thought, as i wont be doing the scheme again after this bike it doesnt really matter as long as they are still doing the 7% extended hire period thing

Koiler

i think i remember reading that the final valuation is based on the price of the bike, not the value of the voucher. ie if you spend £500 on a bike, and £500 on accessories, then the final valuation would be based on the £500 for the bike, rather than the £1000 value of the voucher.

im not sure how it would work after topping up the voucher, my guess would be that the final valuation would based on the £1000 that would be the max value of the voucher initially.

speak to the bike shop you'll be getting it from and ask them, they'll probably have a better idea of what will happen

thebikechain

Are you aware you cannot top up a voucher?

If you do then the company and you both own part of the bike which is not meant to happen.

This is not the correct way to buy your bike.

appy

im well aware i cant technically top up the voucher but as you know it happens

stumpyjon

You can't do it for all sorts of reasons, there are allegedly some shops out there that have done it. Personally I wouldn't recommend it, it's way outside the spirit of the scheme and the inland revenue are already cracking down on final value abuses.

If you really want to get a more expensive bike you'll need to sweet talk your company into applying for a consumer credit licens.

Good luck.

mea00csf

the issue is that as it's outside of the schemes rules, no-one can actually give you a definitive answer, because it's outside of the rules. There's nothing written down about it, and they can't write anything down about it because then that's agreeing to sell it at a set price, which also is not allowed.

The only thing you could do is ask your company, but if they happen to change their mind, you wouldn't have a leg to stand. The other problem would be, to keep paperwork inside the rules, you could end up with a reciept stating that £1000 was paid for the bike.

ooermissus

There's, of course, nothing at all to stop you and the bike shop coming to an arrangement on the side - and I find it hard to see why the Revenue would care.

The only person who loses out is you - you'd be handing over £500 to persuade the bike shop to let your employer buy a bike for less than its market price. In effect, you're giving £500 (on which you've already paid tax) back to your employer.

Will it have an impact on final value? Probably not if your company applies whatever formula it uses to the price it originally paid - xx% of £1k. Maybe, though, if it goes to the trouble of trying to work out what the actual market value of the bike is at the end of the scheme.

Shame you can't get credit.

appy

all valid points and taken on board


if i intended to get another bike in 18 months i wouldnt dream of putting money in but in light of the recent clarification/extended hire period thingy where it will cost me 7% im thinking ill still be ok as i intend to keep this bike and not use the cycle scheme again

if i only get a bike up to £1000 i know that i will need/want a better more suitable bike very very soon so will end up paying out another £1500 for another bike and end up with two bikes i wont use ( currently have a 17 month old trek 6300 and feel i need a short travel full suspension )
so my thinking is buy right, buy once even if i dont save anything ill still be getting the right bike on credit otherwise i wouldnt be able to

does that make sense??

appy

just to add my bike choices are a 2011 £1400 cube ams or an easier option will be the 2010 ghost asx 5500 which has been reduced to £1150 so only requiring a lower cycle scheme voucher or just putting £150 towards a full £1000 voucher

supersonic

and I find it hard to see why the Revenue would care.

From what I hear they are really cracking down on this. The other problem is who owns what. Is a minefield if it goes wrong.

meesterbond

When I looked into this a couple of months back, Evans were still prepared to allow me to 'top-up' the voucher but were fully expecting to get some guidance from HMRC which would prohibit it in the near future.
As it was going to take 2 months for the voucher to arrive and there wasn't anything I wanted for £1k I decided against it.

I don't know whether they've received that guidance yet, but I'd certainly check before committing.

robz400

FWIW - I just bought a road bike on the cyclescheme the shop allowed me to top up to £1400. The invoice is made out to £1000 and this is the cost if the bike.

The final valuation is set on the invoice and therefore x% of £1000.

The bigger chains have mostly stopped this but the smaller shops are often still prepared to do it.

mea00csf

meesterbond wrote:

When I looked into this a couple of months back, Evans were still prepared to allow me to 'top-up' the voucher but were fully expecting to get some guidance from HMRC which would prohibit it in the near future.
As it was going to take 2 months for the voucher to arrive and there wasn't anything I wanted for £1k I decided against it.

I don't know whether they've received that guidance yet, but I'd certainly check before committing.

There's no need for them to get extra guidance, it's already prohibited, and has been since the start of the scheme. The fact that they're cracking down on final valuations more just means that they're anticipating them cracking down on this more.

Shotsaway

meesterbond wrote:

Evans were still prepared to allow me to 'top-up' the voucher but were fully expecting to get some guidance from HMRC which would prohibit it in the near future

The ‘top up’ issue isn’t anything to do with HMRC, so it would interesting to know what sort of guidance they were expecting?

There are a couple of reasons why ‘top up’ is a no go!

1) Consumer Credit Licence – There is no upper limit on the value of the bike that can be purchased but under the Consumer Credit Act an employer will have to apply for a “Consumer Credit Licence” to offer credit for values above £1000. This would obviously create extra administration and cost for employers. Why would an employer want to create extra work and cost? However if you work for an organisation that already has a brokerage CCL (i.e. Banks, Mortgage Brokers, Car Dealers, Finance Companies) there is no reason why you shouldn’t be able to hire a more expensive bike, providing your employer is happy to do this (Remember they are paying for the bikes upfront, so some employers may not be willing to spend £4000 on a bike upfront!)

2) Legal Title - The second reason why ‘top up’ is a no go, is because the employer is buying an asset (bike) which will appear on their balance sheet. When the employer is parting with their cash, they are also expecting legal title and ownership of the asset. If the asset is sold to two parties (The employer and the employee), who would have legal title? The employer should have title and the employee has rights of possession. I’m guessing if an employer and an employee ended up in court, over a title dispute that the employer would win! Especially if the court finds out that the employee ‘topped up’ and withheld this from the employer!

Now this is highly unlikely but imagine that you have ‘topped up’ by £1000 and in 6 months, your employer goes into administration/liquidation (Don’t say this won’t happen to your employer, as it can happen to any business). Anyway IF the liquidators are called in, they will need to dispose of all company assets, which they will probably do through an auction (That way they can prove that they got a fair market price). To do that they will want the bike, that you are hiring back! If you can’t give them the bike they will pursue you, as you will be a debtor.

3) Refusal to sell at the end of the hire period - What if you ‘topped up’ by a £1000 and at the end of the 12 months (or when you resign after 2 months), your employer decides NOT TO SELL the bike to you? Remember you have only hired it at this point! The HMRC (This is the HMRC bit) prevents any agreement at the outset, for an automatic transfer of ownership to the employee at the end of the hire period. So you could end up kissing goodbye to your ‘top up’ and have nothing to show for it!

4) Insurance – This may or may not be an issue but if you ‘top up’ by a £1000, do you get a receipt for the total bike cost? Or does the bike shop give you a supplementary invoice for the difference? If you receive a receipt/invoice for the ‘top up’, rather than the true invoice price, what would your insurance company do if the bike is stolen? After all the insurance company would probably want to see the receipt.

appy

Shotsaway wrote:

meesterbond wrote:

Evans were still prepared to allow me to 'top-up' the voucher but were fully expecting to get some guidance from HMRC which would prohibit it in the near future

The ‘top up’ issue isn’t anything to do with HMRC, so it would interesting to know what sort of guidance they were expecting?


Now this is highly unlikely but imagine that you have ‘topped up’ by £1000 and in 6 months, your employer goes into administration/liquidation (Don’t say this won’t happen to your employer, as it can happen to any business). Anyway IF the liquidators are called in, they will need to dispose of all company assets, which they will probably do through an auction (That way they can prove that they got a fair market price). To do that they will want the bike, that you are hiring back! If you can’t give them the bike they will pursue you, as you will be a debtor.

.

this wont happen unless Cheshire loses its firebrigade lol


ive decided to go for the 2010 ghost asx 5500 at £1150 rater than the £1400 cube, so only have to put £150 in. as ill not be going on the scheme again ill opt for the 7% extended hire period in 18 months so wont get stung with a high fvp


cheers for the input folks

meesterbond

Sorry, that should have read 'DoT' rather than HMRC, and the 'guidance' should have been in quotes.

All of the recent tightening of the scheme seems to come about after HMRC's recent audits of a few high profile schemes, although personally I still think they're missing the main failing of the scheme in that it's supposed to be for commuting. Of the dozen or so people I know who've used the scheme, only 1 regularly commutes to work by bike, and not on the bike he bought through ridetowork.

Maybe it's different elsewhere, but if that element of it was investigated then it would be closed in an instant.