Cycle to Work Scheme

bilsea159
bilsea159 Posts: 256
edited December 2010 in Road buying advice
Just received a letter from my employer informing me of the goverment tightening up tax rules on the Cycle to work schemes. It states that my scheme due to end March 2011 values the bike at the end of the scheme to be 5% of the capital value or £20 plus vat., a figure that the goverment considers now to be undervalued. It states in my letter that I will receive a follow up revised valuation in February stating the new valuation to be between 16 and 21%.

A bit of a anoyance I think.

Comments

  • chrishumes
    chrishumes Posts: 227
    yip, if under 500 it will be 16% and if over 25%, ie 250 quid! look on the cyclescheme webpage for options rather than paying this, ive just been stung as well
  • benpinnick
    benpinnick Posts: 4,148
    Ask your employer to waive the charge and report the 16-25% as a benefit in kind. That way you'll only pay tax and Nic on it (reducing the bill back to around 5%).
    A Flock of Birds
    + some other bikes.
  • Tonymufc
    Tonymufc Posts: 1,016
    Does your company not offer you the option of deferring the payments for three years. Cyclescheme take ownership of the bike you pay a small fee then a fmv at the end of the extended term. Predicted fmv is 5%-7% of original value. This is the option I plan to take.
  • benpinnick
    benpinnick Posts: 4,148
    Tonymufc wrote:
    Does your company not offer you the option of deferring the payments for three years. Cyclescheme take ownership of the bike you pay a small fee then a fmv at the end of the extended term. Predicted fmv is 5%-7% of original value. This is the option I plan to take.

    Tony, why would anyone bother with that level of hassle? Just declare the bike as 25%, stick it on your P11d and pay tax on it next year (spread over a year). Soooooo much easier.
    A Flock of Birds
    + some other bikes.
  • merlinghnd
    merlinghnd Posts: 106
    My company who use Halfords have decided to carry on charging a final payment of 3%plus VAT. They will take this off the Fair Value and the difference wil be a benefit in kind, P11 form and you pay the tax on this. Therefore as a higher rate tax payer ( it would be less as a standard rate tax payer) for a £1000 bike I will pay about £35 final payment plus £86 tax on Fair Value which is spread over the next tax year. They have decided not to extend the loan agreement beyond the 1 year. Not as good as it was but still not bad.

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