Ride2Work

JohnClem88

Hi,

I want to do this Ride to work scheme but have no clear explanation of how it work as of yet! My father is my employer, as I am a contractor it was easier to go through his business rather than set up my own. Anyway we want to know if the monthly repayments from me (employee) to my dad (employer) is up to the discretion of the employer (dad)? So for instance if i was to put the money needed to buy the bike into the company to pay for it, my dads company has effectively not paid anything as i have supplied the money, but also i do not have to pay anything thereafter as i have paid what in effect would be the 12 monthly payments in one go!

Thanks

John

pdw

[ Edit - I think I misunderstood your position originally ]

The tax break is for "making a bike available". The company buys the bike, and can then let you use it for free, or rent it to you, and it's not considered a taxable benefit, meaning any rental payments can come out of your pre-tax earnings. Also, assuming your company is VAT registered, they will have paid less for the bike than you would have done, as they can reclaim the VAT.

If you just give the company the money for the bike up-front, that looks a lot like them selling you the bike. This is not covered by the tax break, and if you paid less than the full price, it would be considered a taxable benefit.

The Rookie

Note that the 12 monthly payments (or single up front payment I guess) cover the rental of the year, if you want to then take possession of the bike you have to either pay fair market value to the company or declare it as a taxable benefit in kind.

As you are a contracter and not strictly an employee of the company I don't think they can do that for you, but there is no reason why YOUR company (of which you are the owner) buy the bike for their employee (YOU)......of course at the end of the 12 months you would own the bike (as company owner) anyway.......

Simon

t4tomo

I think what you are saying is you aren't contracting for you dad, you're using his Ltd co?

Are you drawing a salary from teh limited co, as you need to be to get the tax benefit.

It has to be done by salary sacrfice over a loan period (normally of at least 12 months) so your idea of putting money into teh company to buy it won't work. - BUT you could leave some of your contractor earnings in the company to use to buy it.

you also must have all correct paperwork in place.


BUT BUT you'd save more tax by just being paid minimum wage (and hence unable to do a salary sacrifice) and taking the rest of your earnings out via dividend and just buy a bike as normal.