How much are your C2W contributions? Mine seem high

0scar

I have a £1000 voucher through C2W and my deductions seem high - £83.34 per month, which adds up to £1000 a year.

Unless I've just misunderstood my payslip it doesn't look like I'm saving any money. Is anyone else in this situation?

gosport_commuter

You will pay the full £1000 out of your wages.

The way you save money is that this £1000 is UNTAXED. so as a VERY rough guide to show how you save money (how much will depend on your normal tax rate/NI contributions) lets say all in you normally pay 30%.

normally if you got that £1000 (before tax) in wages to you, it would have the 30% deducted - so you would only normally GET £700. so the bike is actually costing you £700 in this example - £700 after tax.

make sense?

0scar

Thanks that does make sense - I think I'm just confused by the order in which the deductions are printed on my payslip (ie Income Tax, then NI, then cycle deduction). But should it not also be free of VAT?

gosport_commuter

Im not 100% as I have not used the scheme myself, but I am not aware of it being VAT free. just income tax/ni free.

ads2k

It used to be VAT free but from the 1st Jan 2012 you will also pay the VAT now

Shouldn't equal the 1K now though, it should be less the tax/NI as it's a salary sacrifice payment.

RufusA

The HMRC issued clarification on the VAT treatment for C2W and from January 2012 salary deductions should take in to account VAT:

http://www.hmrc.gov.uk/briefs/vat/brief2811.htm

Deductions prior to that can be net of VAT, but it may be that the scheme provider has just used the gross figure to keep things simple!

As for deductions, assuming your salary is reasonably constant, compare last months with this months take home pay to check if it's the full £83ish lower, or just £40-60ish less. It's not unknown for HR departments to muck up C2W salary deductions!

Rufus.

pdw

Mine are just under £61 (pre-tax) on a £1k bike, but our scheme is set up fairly aggressively. Obviously the net cost is rather less due to the tax benefit.

As other have said, it'll being going up in January due to the new VAT rule.

shouldbeinbed

Mine was £72 over 12 months for £1k & I thought that was OTT. I argued the toss with payroll but they weren't for budging. Inc FMV I paid £936. I wouldn't do b2w again with my lot.

cyberknight

My payments on a £800 bike are £59 gross which comes out at £42 net ( i think ) , add vat to it your looking at the original gross figure,along with the final payment even with vat i will still pay less than the full cost of the bike.

Slapster_UK

I have just bought two bikes (one for me and one for the little lady), and having discussed the options fully at my LBS, we decide not to bother.

It appears that the concession has been partly eroded with the VAT thing, and the tax "claw back" adversely effects pension contributions as it is taken off the top line. Not by much, but every little helps - so they say!!

Coupled with this the fact that to actually use the scheme costs the LBS, which cuts into their profits, we were able to make a good saving for a cash deal.

I think, that whilst the original idea was a winner, the grown up's have now realised that the only financial losers were the treasury, so are gradually working towards recanting on the deal.......

Blue Meanie

+1 Slapster - consider it an interest free loan, but with more paperwork.

0scar

Thanks for all the replies. I'll get on to payroll about whether they have just decided to include VAT to keep it simple. If I'd known it was going to cost this much I wouldn't have bothered!

0scar

RufusA wrote:

http://www.hmrc.gov.uk/briefs/vat/brief2811.htm

I see from the linked valuation table that I may well be stung for 25% of the bike's value in July. Amazing.

bails87

Or you can make a small payment and keep using the bike for another 3 years for free, while it still belongs to the company.

My employer didn't go with the table, they figured that we'd signed up expecting another monthly payment to buy the bike, so they honoured that. That's their decision, I wasn't going to argue the rights and wrongs of it and volunteer another £170!

My bike was £1k, I also paid £83 per payslip, but as pointed out, my taxable and NI-able income was then £83 lower, so I also saved the tax. My employer isn't VAT registered (strangely), so I didn't save VAT.