Bike 2 Work (again, sorry)...

Headhuunter

...Does the new final valuation acc to HMRC guidelines include the bike or the entire voucher value? For example, I bought a Ribble for, I think £570, but took out a voucher for nearly £1000 because I bought new wheels, a pump, some new brake pads and a few other nick nacks.

Cycle Scheme is valuing the entire package at HMRC levels but are a set of 2nd brake pads for example, really worth 25% of their original value after a year? The pump? The wheels?

Headhuunter

HMRC site continually refers to "cycles", although at the end it says

"In calculating the original price of the cycle, include safety equipment fitted to the cycle (such as lights and bells) but not safety equipment which would be worn by the cyclist (such as helmets or reflective clothing). Where used regularly for commuting and/or travel between workplaces, safety equipment worn by the cyclist is likely to have a market value that is lower than the table percentages for a cycle and cycle-based safety equipment."

http://www.hmrc.gov.uk/manuals/eimanual/eim21667a.htm

Headhuunter

Anyone? Bueller? Anyone??

Agent57

I've no idea, but I'm replying just so you don't think everyone's ignoring you.

UndercoverElephant

Agent57 wrote:

I've no idea, but I'm replying just so you don't think everyone's ignoring you.

I know, how needy is he getting?

I don't know the answer either, but I assume the value is the whole voucher.

dhope

Think the process would be to speak to HR and/or Cyclescheme and have them revalue it, explaining that a 1yr old helmet, 1yr old brake pads etc are would not be worth 25%. Certainly doable

calonuk

Headhuunter wrote:

HMRC site continually refers to "cycles", although at the end it says

"In calculating the original price of the cycle, include safety equipment fitted to the cycle (such as lights and bells) but not safety equipment which would be worn by the cyclist (such as helmets or reflective clothing). Where used regularly for commuting and/or travel between workplaces, safety equipment worn by the cyclist is likely to have a market value that is lower than the table percentages for a cycle and cycle-based safety equipment."

http://www.hmrc.gov.uk/manuals/eimanual/eim21667a.htm

What the above is saying is that if you bought a £570 bike and the fitted lights pannier and guards then you have to work it out on those items. if you spent the £250 on clothing and a helmet and backpack then you only work it out on the bike.

Unfortunately you could but stiffed on what you have bought as it seems bike related.
The HMRC are really screwing employees with this at the moment becasue technically you have already paid for the bike and equipment in full.

sketchley

Ok the purpose of the FMV guidelines is to give employers and employees a mechanism of calculating FMV that if followed will not incur any follow up questions from HMRC. Not that you every get any anyway.

All you need to do is work out what you think the FMV should be and pay that. You do not even have to follow the table, if for example at the end of the hire period as you've done 15,000 miles the bike is f*cked then pay what it is worth. The caveat to this is that you may have to prove this to HMRC if they can be bothered to check or ask.

That being said you are going through cycle scheme so it'll be their rules.

Finally and this is the important bit C2W is only supposed to be for Complete Bicycles and Safety equipment. That fact wiggle let you buy other stuff is a problem. If you push a different valuation for the other bits you may leave yourself open to the fact you should not of got tax relief on the rental of these bits.

If you are at end of one year and up for a 25% fmv, ask Cycle Scheme to extended the rental period at zero cost to you for another 2 years, I believe they will ask you to pay a deposit equal to the 5% FMV due at the end of that period. Technically you won't own the bike for another 2 years but you've not own it for the last one either.

bails87

dhope wrote:

Think the process would be to speak to HR and/or Cyclescheme and have them revalue it, explaining that a 1yr old helmet, 1yr old brake pads etc are would not be worth 25%. Certainly doable

Definitely doabl on (used) brake pads, maybe doable on the helmet, probably not with the pump.

The Rookie

calonuk wrote:

The HMRC are really screwing employees with this at the moment becasue technically you have already paid for the bike and equipment in full.

No, technically you have rented it for a year, you have not paid for (purchased) it AT ALL. It still belongs 100% to the original purchaser.

Simon

Headhuunter

Thanks all.... Will have to have a think if it's worth "haggling" with Cycle Scheme! BTW, it's definitely possible to claim the VAT back on B2W bikes and stuff isn't it? Even after the "rental period" is over?

cee

Headhuunter wrote:

Thanks all.... Will have to have a think if it's worth "haggling" with Cycle Scheme! BTW, it's definitely possible to claim the VAT back on B2W bikes and stuff isn't it? Even after the "rental period" is over?

AFAIK....and there might be other options available.....but....

You don't claim the VAT back. Your company (or cyclescheme) do....as you are not VAT registered....thats the company

Mine cost £850

I paid £60.28 per month.

so that was the £850 - VAT = 723.40 split equally into 12 monthly payments.

sketchley

cee wrote:

Headhuunter wrote:

Thanks all.... Will have to have a think if it's worth "haggling" with Cycle Scheme! BTW, it's definitely possible to claim the VAT back on B2W bikes and stuff isn't it? Even after the "rental period" is over?

AFAIK....and there might be other options available.....but....

You don't claim the VAT back. Your company (or cyclescheme) do....as you are not VAT registered....thats the company

Mine cost £850

I paid £60.28 per month.

so that was the £850 - VAT = 723.40 split equally into 12 monthly payments.

This is correct assuming your company is VAT registered some are not or cannot claim back the VAT like the BBC (don't ask me why I can't remember). However, FMV value is % including the vat as that was and is value to you of the bike. Or if you want to think about it another way if you calculate it without the vat then vat will just be added to you payment on the invoice from Cycle Scheme.

You may want to follow this link http://www.cyclescheme.co.uk/employers/ ... mrc-update

bearfraser

And so apparantly is the NHS (not VAT registered) so having serious 2nd thoughts about using the C2W scheme as the discount isnt as good as those that are.Looking at a 0% deal with the LBS.

notsoblue

Sketchley wrote:

If you are at end of one year and up for a 25% fmv, ask Cycle Scheme to extended the rental period at zero cost to you for another 2 years, I believe they will ask you to pay a deposit equal to the 5% FMV due at the end of that period. Technically you won't own the bike for another 2 years but you've not own it for the last one either.

^ I'd do this if I were you. Unless you're planning to sell the bike on, I'm not sure how you'd be losing out? It doesn't even stop you from getting another bike through cyclescheme once this hire period is over.

TheStone

Anyone know where the extra money goes?

It seems with the new FMV, you end up paying 125% of the cost of the bike (offset by a saving in paying less tax/vat).

But does the cyclescheme get the 125% or is some paid back as tax.

lardboy

TheStone wrote:

Anyone know where the extra money goes?

It seems with the new FMV, you end up paying 125% of the cost of the bike (offset by a saving in paying less tax/vat).

But does the cyclescheme get the 125% or is some paid back as tax.

I don't know for sure, but I'd bet cold hard cash that it stays in CS's pockets, hence why they are being so strict about applying HMRC guidelines.

Remember that your company does not have to set the hire costs so that the full cost of the voucher is reclaimed during the 12 months repayments. They could set them so that 75% of the voucher is covered by repayments, and then the final FMV payment of 25% covers the rest. As far as I know this is completely legal and maintains the full savings of the scheme for the end user.

If you can get your company to run their own scheme instead of using these profiteering leeches, everyone is better off.

TheStone

lardboy wrote:

I don't know for sure, but I'd bet cold hard cash that it stays in CS's pockets, hence why they are being so strict about applying HMRC guidelines.

It's got that usual british govt mess look written all over it.

sketchley

Yes it's Cycle Scheme's Profit Margin (or charge for running the scheme depending on how you look at it) that and 10% they charge retailer.

Note though that with there new option to extend the rental to 3 years they get no more money than they did under old calculation, in fact in some cases they get less than previous calculations.

As an alternative to extending the rental period to 3 years you could rent the bike for one year at a rate equivalent to 75% of the cost then pay the 25% FMV to get to the final value. I do not think this is as tax efficient as extending the rental period though. Incidental your company can rent you the bike for whatever rate they see fit including nothing if they wish.

TheStone

Sketchley wrote:

Yes it's Cycle Scheme's Profit Margin (or charge for running the scheme depending on how you look at it) that and 10% they charge retailer.

Wow ... so they're getting something around 35% of the value of the bike for doing very little.

Under the new guidelines the end user saves very little (maybe 10%).
The govt loses a fair amount of tax revenue.

If you extend the hire period, what's to say they won't change the terms again and not even allow you to return the bike?

What a typical british mess of a system.

sketchley

TheStone wrote:

Sketchley wrote:

Yes it's Cycle Scheme's Profit Margin (or charge for running the scheme depending on how you look at it) that and 10% they charge retailer.

Wow ... so they're getting something around 35% of the value of the bike for doing very little.

Under the new guidelines the end user saves very little (maybe 10%).
The govt loses a fair amount of tax revenue.

If you extend the hire period, what's to say they won't change the terms again and not even allow you to return the bike?

What a typical british mess of a system.

Well that make 10% from the retailer.

As for FMV is your silly enough to pay 25% after one year then yes they are getting 35% but if you follow their instructions in this link http://www.cyclescheme.co.uk/employers/ ... mrc-update you will only pay a deposit of 3% if bike is less than £500 or 7% if over £500 so they make somewhere between 13% and 17% on the value of the bikes. Excluding anyone who simply hands the bike back.

To put that in context, if someone buys a £200 Halfords bike Cyclesheme get just £26 to administer the scheme. For a £1000 bike they get £170 though.

You do know that you do not need to use Cyclescheme you cna just do this direct with employer. e.g. Employer buys bike for you (any bike) Download and fill out the rental agreement forms widely available for free on the net (see planet X) then instruct payroll to perform the salary sacrifice which they should know how to do. It's what we do here.

As I said above the value of the rental via salary sacrifice does not have to equal the cost of the bike. It could be cost of bike less FMV if you want.

pdw

TheStone wrote:

Under the new guidelines the end user saves very little (maybe 10%).

I don't think it's that bad, even under Cyclescheme, but done properly, it's perfectly possible to get savings of well over 40% (or over 50% for higher rate tax payers) without it costing the company anything.

There is no lower limit to what a company can charge for the rental fees. In fact, they can just lend you the bike for free, if they're feeling generous.