silly question about C2W scheme

tim_wand

For the past 10 years I worked for the civil service who ran a scheme similiar to C2W to
purchase a bike to commute to work. Basically they loaned you the money at 0% interest
then took the repayments over 12 months direct from your gross salary and taxed you
on the remainder.

I now work for the private sector ( yer I know welcome to the real world) and my employer does not / will not sign up to the C2W despite having over 200 employees are there no third parties or agencies who can take direct from my wages and allow me to to purchase a bike through C2W or similiar scheme.

I bike to work every day. surely there must be some enviromental department in goverment that can support me to do this even if my employer doesnt ?

tptvmbircn

Where I work they have the C2W scheme, but, i'm tied in for three year and the savings are not huge so i decided to save up a deposit hit the LBS and do it that way so the less the monthly repayments are. in my opinion its a bit of a waste of time but im sure some will disagree plus as far as i'm aware some employers are different?

jimmypippa

My C2W bike is coming to the end of its (12-month) hire period. I can then either
a) stop the scheme and hand the bike back
b) buy the bike for 20% of its original list price
c) pay 7% of the list price as a deposit and keep the bike on loan for 3-years, after which the bike reverts to me if I don't want the deposit back.

In the cyclescheme FAQ, it states that I can go through c2W again as soon as the initial (in my case 12-month) period is up.

tptvmbircn

well that proves my point every company must run differently, mine is something like after 3 year is up the employer decides if they want to sell it to me for 2% list price

jimmypippa

stealthelite1986 wrote:

well that proves my point every company must run differently, mine is something like after 3 year is up the employer decides if they want to sell it to me for 2% list price

I think it was due to the changes that HMRC implemented about bicycle valuations in the C2W scheme in the middle of last year.

evil_breakfast

tim wand wrote:

Basically they loaned you the money at 0% interest
then took the repayments over 12 months direct from your gross salary and taxed you
on the remainder.

Could you expand on that a bit as i'm a bit hazy as to what that ultimately means?
BTW, I work for the JCP and have recently done this (FAM6) for a summer steed.
Ta.

tim_wand

Basically. They loan me 500 quid. I pay it back in 12 payments of about £42 or whatever £500 / 12 is. that £42 is deducted from my Gross salary and then im taxed on the remaining salary, therefore I get a tax break on the £42.

The Rookie

That is salary sacrifice, and can only be done on a number of approved schemes, one of which is C2W (includes nursery vouchers etc) and therefore the scheme has to comply with all the rules of C2W such as FMV final payment.

In Stealths case the compnay seems to have adopted a 3 year syste to reduce the FMV to close to zero to aid the scheme users (well make it cheaper anyway!)

Simon

pdw

The government "scheme" is simply a tax break that allows employers to make a bike available to employees for commuting and for it to not be considered a taxable benefit. This is coupled with a group credit licence which allows employers to recover their costs by hiring the bike to their employees (an act that would usually require a credit licence).

What it does not do is provide any tax relief on the sale of a bike to an employee. If an employer sells the bike at less than "fair market value", it's considered a taxable benefit.

HMRC have issued guidance on minimum fair market values for bikes that have been used in the scheme, which diminish with age of the bike, as you'd expect, which means if you delay the sale of the bike, you can sell if for less without incurring any tax liability. This guidance was introduced after many schemes were found to be selling bikes at unrealistically low values (e.g. £50 for a one year old £1k bike).

Within these constraints, companies are free to implement the scheme however they wish, and there will be differences in how much of the bike's value the company wishes to recover through the hire arrangement, at what point it decides to sell the bike to the employee, and whether it's prepared to sell the bike at less than FMV and account for the taxable benefit on the difference.

cougie

Tim - what happened to the bike you bought during your last job then ?

RufusA

@cougie - you're forgetting the n+1 rule!

cougie

I'm just jealous that my 'green' company doesnt want to join the C2W scheme !

Tonymufc

jimmypippa wrote:

My C2W bike is coming to the end of its (12-month) hire period. I can then either
a) stop the scheme and hand the bike back
b) buy the bike for 20% of its original list price
c) pay 7% of the list price as a deposit and keep the bike on loan for 3-years, after which the bike reverts to me if I don't want the deposit back.

In the cyclescheme FAQ, it states that I can go through c2W again as soon as the initial (in my case 12-month) period is up.

This is exactly the same as my employer, and I shall be opting for option C.

tim_wand

Coughie. After 12 months I 'd payed the full value of the loan. There was no interest to pay and the payments were taken from wages before tax (salary sacrifice) so the only advantage to me was the tax relief

. This scheme isnt C2W its part of civil service travel and subsitence allowance in the same way as someone could purchase a Rail season ticket and get the same tax relief.

The employee includes it under its Greening Matters Policy. Therefore after 12 months the bike is mine.

Ive changed employer now and I m in the same boat as you, my perportedly "green" employer doesnt run the C2W scheme.

benpinnick

Anyone who's company won't do cycle to work, PM me with your companies name and address, and I will pass to a friend who is setting up a new scheme management company. He hassle them into it - I won't pass your personal details on!