cycle to work scheme (again!)

mmuk

I'm sure this will have been covered earlier - but I tried the search facitlity......

I have an employee who has finished paying the monthly dues, what percentage of the bikes value do I charge to finish the contract?

please!

MM

explosifpete

As far as I know the final payment only needs to be 1p as the bike has been paid for by the employee but it is put in place as the scheme works out that he is leasing the bike from you rather than paying for it.
Not sure if that makes sense, if not i'll have another go

whitestar1

I was under the impression that it would be the market valve at the end of the monthly payment and that should had been agreed on at the time of the contract. There was an arguement that it should be 5% of the FMV then after new arrangement by government it was rised to 25%. It's all here in the forum somewhere. The idea is that the monthly payments is a lease as said before, the employer determines the cost should the employee wish to buy it outright. As I understand it, that value is up to the boss. Third party companies such as cycle2work etc. will go for the 25% of the FMV.

Blandiblub

My company (I think!) went for me paying the tax on 25% of the FMV, which will be deducted when my tax code changes and could be next April or the one after that.

Would imagine the final 'bill' being something like £50 (based on my voucher of £650).

pdw

mmuk wrote:

I have an employee who has finished paying the monthly dues, what percentage of the bikes value do I charge to finish the contract?

The contract is finished, but the company owns the bike.

You now have the option to offer to sell the employee the bike. You can do this at whatever price you feel like, but if it is too low, it will be considered a taxable benefit. Helpfully, HMRC publish guidelines on what constitutes "too low":

http://www.hmrc.gov.uk/manuals/eimanual/EIM21667a.htm

The best thing to do is not transfer ownership for a few years, and then charge them a penny and treat the difference as a taxable benefit, although there's clearly more paperwork involved to do that.