Cycle to work scheme and Consumer Credit Licences

Amanensia
Amanensia Posts: 13
edited July 2011 in Road buying advice
Hi - one for the accountants out there...

I own my own small business (VAT registered limited company) and would like to provide myself with a bike under the "cycle to work" scheme. I understand that any supply of equipment will generally be treated as provision of consumer credit, and if the supplied equipment has a value greater than £1000 then the supplying company requires a consumer credit licence.

In my case, my company will not be seeking to recover the costs of the cycle from me at all - ie there will be no salary sacrifice or any other form of repayment from me to the company, the bike will simply be loaned to me at no charge. Some of the guidance, although it is not entirely clear, implies that regardless of the lack of repayment, the supply of the bike would still be viewed as a consumer credit agreement and so a CCL would be necessary.

Can anyone confirm whether this is in fact true? It seems odd that an agreement between my company and myself that does not require me to pay anything could be construed as the provision of credit. (My aim is to supply myself with a bike that will cost a fair bit more than £1000.)

Cheers!

Comments

  • Slow Downcp
    Slow Downcp Posts: 3,041
    Revenue guidance of free provision of cycles:

    http://www.hmrc.gov.uk/paye/exb/a-z/c/cyclists.htm

    It would be treated as an asset to the company, the same way as any other asset. As they're not leasing it to you (but loaning) then CCL doesn't come in to it.
    Carlsberg don't make cycle clothing, but if they did it would probably still not be as good as Assos
  • Amanensia
    Amanensia Posts: 13
    Thanks for that. The benefit of doing it through the "cycle to work" scheme explicitly though, I think, is that I'd get a 100% writeoff against tax in year 1, rather than having to depreciate the asset over its useful life. Still, if I can't use the scheme, it's probably still well worth doing as a regular business asset, so thanks.
  • navrig
    navrig Posts: 1,352
    Office in the spare bedroom?

    You'll need an MTB to climb the stairs from the kitchen :lol:
  • gsk82
    gsk82 Posts: 3,466
    unless you have a lot of capital expenditure you'll get 100% AIA (ie 100 tax allowances) anyway. i think the AIA limit for this year is £25k meaning the first £25k, subject to excluded items, gets 100% allowances

    EDIT: i think its actually £100k til April next year
    "Unfortunately these days a lot of people don’t understand the real quality of a bike" Ernesto Colnago
  • I'm not an accountant so can't claim any real expertise, but wouldn't you make more savings by following the C2W scheme and making salary deductions? Unless you aren't drawing a salary, your business could claim back VAT, make deductions for capital expenditure and reduce its NI contribution. Likewise, you'd be able to reduce your PAYE and NI contribution (although I guess you'll still have the same problem of not having a CCL) .

    Alternatively, can't you just depreciate it over 12 months? Unless you're concerned about external parties seeing a dip in your bottom line, there's no reason to spread the cost over multiple years; isn't that the whole point of depreciation - to spread the cost over time so your profits aren't unduly affect?
    Training is like fighting with a gorilla. You don’t stop when you’re tired. You stop when the gorilla is tired.