cycle2work...did you know?

trevtherev

I was under the impression that on the cycle2work scheme the limit was or is usually £1000...however certain dealers will let you pay above this price if you pay the difference to them in cash...is this ok?...is it legal...does it matter?

meanredspider

I did this. You only get a voucher for a grand and you pay the difference. I guess the bike is still leased to you though the bit about ownership might be a little complicated. I also don't know how the final valuation is done other than a percentage of a grand. I fully plan on owning mine so it makes not much difference in the end.

RufusA

It's legal, BUT IMHO the HMRC would probably take the opinion that because you owned a percentage of the bicycle, then you intend to acquire the title to the bicycle as part of the rental.

In which case they would see it a hire purchase rather than rental, and therefore not eleigible for tax relief! YMMV!

Two options to do it properly:

1) Persuade your employer to get a consumer credit licence for more than £1k WRT to cycle hire.

2) Persuade the retailer to split the purchase i.e. put cheap wheels on the bike taking it under the £1k threshold, and you buy the expensive wheels seperately!

Rufus.

shouldbeinbed

I'd disagree with Rufus, It's not strictly legal to do it as you could get into a fraudulent claim & shared ownership minefield. I asked before getting into mine and both Cyclescheme and my employers legal department were absolutely clear it wasn't to happen.


you'd need to be up front and have the shared ownership sorted out and in the open from the start as it could have a material effect on your & the employers options at the end of the scheme.

You also need to find a shop willing to join you on this little escapade.

The (well mine did) application form itemised the retail cost of the item(s) bought under c2w to give a voucher total, if the maximum allowable on your scheme is £1000 you will have to be creative with the bike pricing to get the application approved and voucher issued, technically committing a fraud if you are in fact purchasing it for more than you've detailed and signed to be true.

what do you do if your (e.g. £1500) bike is terminally faulty and you are offered a replacement at £1000? Thats what you've initially claimed it is worth & you're in the hands of the retailers dis/honesty and haven't really got a leg to stand on to get a like for like replacement without blowing yourself out to the taxman.

Also in similar vein, your employer is not obliged to offer you the bike at the end of the scheme, they could quite legitimately take it off you and hire it to someone else or scrap it or whatever. You've only paid to lease it from them & it is legally their property until they've offered to sell it to you and you've agreed & paid your FMV. In the unlikely instance that they did not offer it to you, you'd have very little sympathy or recourse in law to claim that you'd effectively defrauded the taxman and the system by secretly part owning it from day 1.

what if you were made redundant or the company went bust mid scheme and didn't/couldn't take the option of buying the remainder out in one go plus an FMV?


At best you'd have to keep quiet and accept the loss of your up front premium, at worst you'd still lose your money and possibly the bike and could well be looking at disciplinary at work (you've conned them too remember), an extra tax bill for the bit you would have been Taxed & NI'd if they hadn't taken your bike lease payment from gross salary before the revenue deductions and possibly prosecution if they were feeling like it.

However the chances of any of the bad stuff happening must be pretty small potatoes and I'm sure a LBS seeing a more expensive sale is going to be amenable to an up front 'deposit' which by some clerical oversight gets knocked off the price they quote the bike at.

beverick

Whether it's illegal per se is open to interpretation and specific conditions but it's certainly contrary to the rules that bind the scheme for most employers.

The £1k limit is defined by credit license your employer needs to hire or lease the bike back to the employee.

Remember, your employer is the legal owner of the bike; they buy it and then lease it to you the employee. You are made aware of the scheme rules (and hence limit) when you sign up and you are expected to abide by the rules. Failing to comply with the scheme would be classed as being gross misconduct, and hence leave you open to disciplinary procedures and the possibility of summary dismissal where I work.

Also, in knowig the scheme limits, if you propose paying a supplement to the supplier you're potentially attempting to obtain goods by deception (ie greater than the £1000 limit) and hence could be guilty of fraud. You are also colluding with another (the supplier) to obtain, in their case monies and in your case goods, exceeding the authorised value and hence you are again acting fraudulently. There is no doubt an offence against the HMRC as well but I can't be bothered working that one through.

The 2005 Fraud Act applies:

"Fraud by false representation" A person is in breach of this section [of the act] if he dishonestly makes a false representation, and intends, by making the representation to make a gain for himself or another, or to cause loss to another or to expose another to a risk of loss.

Bob[/list]

The Rookie

Its illegal in that it would constiute Tax evasion, you either comply with the rules of the scheme and gain the relief legitemately or you don't and it's tax evasion.

Simon