Cycle to work scheme rip off

shouldbeinbed

Rolf F wrote:

dilemna wrote:

I hope you have actually used your bike to cycle to work rather than only using it on a few dry summer weekends which would be tax fraud and I don't see why I and other tax payers should subsidise fraud.

You only have to equal your leisure miles with commute miles. So, 100 miles of sunny leisure days plus 100 miles of commute is entirely legitimate. But does it really bother you that much? Half the reason for the tax break is to encourage spending. Anyone you get into cycling for leisure is likely to spend a lot of money on their hobby. I've incurred far higher tax costs in the money I've spent on cycling than I've saved off C2W. Infact, for the government it is almost certainly better, given one or the other, to get someone to buy a bike on C2W for mainly leisure purposes than someone to buy one purely for commuting.

Expected usage must be local to each scheme: mine specified at least 50% of work commutes must be by the C2W bike during the hire contract period. No mention of work v leisure proportion

pdw

Rolf F wrote:

Expected usage must be local to each scheme: mine specified at least 50% of work commutes must be by the C2W bike during the hire contract period. No mention of work v leisure proportion

All schemes need to comply with the same rules in order to qualify for the tax exemption. The requirement is for the main use of the bike to be for "qualifying journeys". There is no requirement for tax purposes for you to use the bike for a certain proportion of commutes.

http://www.hmrc.gov.uk/manuals/eimanual/EIM21664.htm

rolf_f

shouldbeinbed wrote:

Expected usage must be local to each scheme: mine specified at least 50% of work commutes must be by the C2W bike during the hire contract period. No mention of work v leisure proportion

As PDW said. What you've said is what a lot of people think the requirement is - but it isn't. I recall it did seem pretty confusingly written. If yours genuinely says what you think it says, someone has made a bit of a bogup.

There is actually nothing wrong with parking the bike in the shed for the first year and not using it at all!

UKScooby

pdw wrote:

UKScooby wrote:

Can I tag on the end of this thread.

My company runs a self administered scheme with me doing the paperwork.

We now have some members coming to their anniversary. I want to do the extended hire route with people (if they agreed of course and sign up). I therefore need to prepare a legal document to cover this.

There are a number of online examples of the initial contract that I was able to use in the first place. I have not traced examples of the extended period document.

Does anyone know where I can find one - or have sample wordings to hand ?
Thanks

I'm not sure that you technically need any further documentation. I think because you don't take any money off them, it's just a loan, not a hire agreement, and therefore doesn't come under the Consumer Credit Act.

I understand that Cyclescheme do a thing where they take a deposit up front which covers the final fee, or gets refunded if you don't buy the bike. If you want to do something like that you probably do need some paperwork, but otherwise, I think you can just let the employees carry on using the bikes for free.

Yes - I was planning on doing something like the CycleScheme - 3% - thanks for giving a bit of insight.
Wanting to do something very brief for the avoidance of doubt - but the reality of course is that the bike is the employee's now.

whitestar1

Headhuunter wrote:

I think the problem is that people expected to pay about 5% as a final fee but this was never written into any contract anywhere, it had just come to be the accepted as about the right rate as a nominal transfer fee. HMRC then waded in with the 25% figure which is ridiculously high. Of course a 1 year old ex rental bike with an original sale price of £1000 would probably sell at £200+ on the open market, HMRC's guidelines do not take into account the fact that people have not really been hiring the bike and have already been paying for the bike through their wages and that the whole point of the scheme is to get people onto bikes and out of cars, not to rent bikes to people and then sell them on...

I think its dumb to be paying for year for the bike and then paying 5% or 25% of the value to own it. So what happens to all that money collected? Was it rental fee?

whitestar1

Can you say shouldbeinbed, how much was the bike and how much did you actually pay for it?

Headhuunter

whitestar1 wrote:

Headhuunter wrote:

I think the problem is that people expected to pay about 5% as a final fee but this was never written into any contract anywhere, it had just come to be the accepted as about the right rate as a nominal transfer fee. HMRC then waded in with the 25% figure which is ridiculously high. Of course a 1 year old ex rental bike with an original sale price of £1000 would probably sell at £200+ on the open market, HMRC's guidelines do not take into account the fact that people have not really been hiring the bike and have already been paying for the bike through their wages and that the whole point of the scheme is to get people onto bikes and out of cars, not to rent bikes to people and then sell them on...

I think its dumb to be paying for year for the bike and then paying 5% or 25% of the value to own it. So what happens to all that money collected? Was it rental fee?

Yes, essentially what you pay out of your salary on a monthly basis, is officially, simply rental fee and then at the end of the process you aer buying a 2nd hand, ex rental bike...

whitestar1

Headhuunter wrote:

Yes, essentially what you pay out of your salary on a monthly basis, is officially, simply rental fee and then at the end of the process you aer buying a 2nd hand, ex rental bike...

That so says it all! A rental fee. Well that clears it up for me. I don't think its fair. Guess at the end of it all paying for a bike that you have had for a year ain't too bad. I could never justify a £1000 bike out of the pocket to my wife :roll: well I don't have that any how.

cyberknight

You have to remember that the amount you actually pay is net , not gross.

I have been looking into this and for a £650 bike it works out that i would pay £ 162 final payment with 12 months @ £35 taken from your salry

Total of £582 , so a saving of roughly £70 over the year , not a great amount but you are still getting a saving and spreading the cost over a year.

dilemna

Rolf F wrote:

shouldbeinbed wrote:

Expected usage must be local to each scheme: mine specified at least 50% of work commutes must be by the C2W bike during the hire contract period. No mention of work v leisure proportion

As PDW said. What you've said is what a lot of people think the requirement is - but it isn't. I recall it did seem pretty confusingly written. If yours genuinely says what you think it says, someone has made a bit of a bogup.

There is actually nothing wrong with parking the bike in the shed for the first year and not using it at all!

Which would mean the bike was a BiK therefore not eligible for tax relief quite apart from being a fraud on the Revenue. Why should I and others who don't use the scheme subsidise you and others who take the same approach as you????

optimisticbiker

Rolf F wrote:

shouldbeinbed wrote:

Expected usage must be local to each scheme: mine specified at least 50% of work commutes must be by the C2W bike during the hire contract period. No mention of work v leisure proportion

As PDW said. What you've said is what a lot of people think the requirement is - but it isn't. I recall it did seem pretty confusingly written. If yours genuinely says what you think it says, someone has made a bit of a bogup.

There is actually nothing wrong with parking the bike in the shed for the first year and not using it at all!

I disagree, while the ruling is confusingly written it is very clear there must be 'qualifying journeys' and suggests 50% is a good place to start but then uses the word 'substantial' (which could mean < 50%). The actual para reads (my emphasis):

EIM21664 - Particular benefits: exemption for bicycles wrote: »

Employees are not expected to keep detailed records of time spent cycling or miles travelled for the purpose of this 'main use' test. Accept that the test is satisfied unless there is clear evidence to suggest that less than half of the use of the cycle or equipment is on qualifying journeys. If it is clear that there is substantial use of the cycle for qualifying journeys, do not make special enquiries about the extent of any other use

.

However if you were to be cycling to work on an existing bike and kept the new one for weekends only..... :roll:

se-po

OptimisticBiker wrote:

EIM21664 - Particular benefits: exemption for bicycles wrote: »

Employees are not expected to keep detailed records of time spent cycling or miles travelled for the purpose of this 'main use' test. Accept that the test is satisfied unless there is clear evidence to suggest that less than half of the use of the cycle or equipment is on qualifying journeys. If it is clear that there is substantial use of the cycle for qualifying journeys, do not make special enquiries about the extent of any other use

.

However if you were to be cycling to work on an existing bike and kept the new one for weekends only..... :roll:

The bike park in my company is quite dodgy... I don't fell my new shiny bike is safe there.
Can I be forgiven for using it only at weekends? :-)

chorotega

Seriously do not join this scam.
I joined the Vodafone scheme and was made redundant 4 months after I started the scheme. I leased a £1,000 bike. During the scheme I paid £333.32 which I got the tax and NI benefit on, but when I left I had the remaining £666.68 taken from my pay after tax and NI. So far I had paid back the £1,000 and only made a small saving on just buying it myself. A year later I am now being charged £250 FMV to actually own the bike! My £1,000 bike is actually costing me £1,250.
Only join this scheme if you know that you will not be made redundant otherwise this scheme sucks.

patrickf

chorotega wrote:

Seriously do not join this scam.
I joined the Vodafone scheme and was made redundant 4 months after I started the scheme. I leased a £1,000 bike. During the scheme I paid £333.32 which I got the tax and NI benefit on, but when I left I had the remaining £666.68 taken from my pay after tax and NI. So far I had paid back the £1,000 and only made a small saving on just buying it myself. A year later I am now being charged £250 FMV to actually own the bike! My £1,000 bike is actually costing me £1,250.
Only join this scheme if you know that you will not be made redundant otherwise this scheme sucks.

Sounds like someone in accounting made a big cock up somewhere. Surely by you settling the value of the bike in full meant ownership transferred to you!

I'd have told them to do one.

The Rookie

Holy thread resurrection!

Chorotega, it wasn't your bike until you bought it, next time read up on what you are signing up to!

Crouching Peeky

My £1000 voucher cost me approx £600. The monthly repayments were about £85 a month, but my net pay was only down by about £50 a month because of the tax and NI advantages.

Doesn't matter how you cut it, that isn't a rip off.

paulintheforest

Redundancy or leaving does put a dent in the savings. I'm half way through bike 3 but unfortunately no tax and NI savings on £500 of payments as they were deducted from my redundancy, but at least I saved on the first half.

On the up side I have plenty of time to ride the bike for now, if only the weather would improve. Look for guaranteed sunshine as soon as I start a new job.

andy9964

paulintheforest wrote:

Look for guaranteed sunshine as soon as I start a new job.

Can I be the first to say, good luck on the job search, hope you find one soon

paulintheforest

Andy9964 wrote:

paulintheforest wrote:

Look for guaranteed sunshine as soon as I start a new job.

Can I be the first to say, good luck on the job search, hope you find one soon

Thanks, the market looks OK enough that I expect to be in work well before the money runs out. I just wish I had some nice weather for riding in while I have all this time on my hands.