Cycle to work scheme question

Ringo 68

My company is not involved in the C2W scheme despite the subject being brought up by the unions on several occasions.

My wife is self employed with her own company and I have been pestering her to ask her accountant about joining the scheme. My thinking being that she could get a bike on the scheme, realise it is too big for her and I would do the honourable thing and take it off her hands.

Her accountant basically said it can't be done but after visiting my local Cycle Surgery they said there is no reason why she can't join their scheme (which according to them is geared towards smaller companys)

Any thoughts?

Muffintop

If she's self employed can she just not buy herself a bike through her company and then claim the tax back as she would with every other work related expense. We have a few contractors at work and this is how they run it. It's still a company asset.

There are different rules for every corporation - where I work it's run slightly different from other places so your local Cycle Surgery might not have all the details.

Mx

bianchibob

Am I right in thinking that the VAT reclaim on this scheme has been withdrawn by HMRC. The only way it is saving any money is that you buy the bike through the company. THe monthly payments are taken from your gross earnings (salary sacrifice) and as such you 'save' the income tax on the bike payments.
The savings are therefore not as good as the original scheme.

maxandpaddy

Hello, I am currently on the cycle to work scheme, my weekly wage deducts £19.00 a week but it is actually £13.00 after tax, for a £1,000 pound bike which works out at £676.00 pound over 12 month, not sure if there is a settlement figure at the end of the 12 month period.

t5nel

bianchibob wrote:

Am I right in thinking that the VAT reclaim on this scheme has been withdrawn by HMRC. The only way it is saving any money is that you buy the bike through the company. THe monthly payments are taken from your gross earnings (salary sacrifice) and as such you 'save' the income tax on the bike payments.
The savings are therefore not as good as the original scheme.

Yep, you also don't pay NI either.

VAT was not paid on original scheme and also the final value agreement was more favourable for expensive bikes. It is still worth doing if you are a higher rate (40%) taxpayer. If you pay at basic rate I think you should compare against the best deals you can get on previous year models etc.

rpd_steve

If by self employed you mean that either:
1. She is a sole trader, non registered company who does her own tax returns as SI and works freelance
2. She just does work and then invoices as a person and files a tax self assesment

then she will not be able to be part of any scheme. All goverment schemes are set up for 'employers', legally meaning a Limited registered company (Ltd.) or a PLC. Thats because all payments need to come out of a PAYE system.

That said if by self employed you mean she is a director in a Ltd. company that she started/runs then she is considered an employee of that company and not self employed. In short employed people pay tax via PAYE, self-employed people do it via a Tax self assessment.

Hope it helps!

Ringo 68

RPD Steve wrote:

That said if by self employed you mean she is a director in a Ltd. company that she started/runs then she is considered an employee of that company and not self employed. In short employed people pay tax via PAYE, self-employed people do it via a Tax self assessment.

Hope it helps!

I think this fits the bill. My wife is a director of a Ltd company but she pays herself a wage every month (minimum wage I think)

Thanks for your help, and everybodys else who has replied as well.

unixnerd

I'm a director of my own ltd company. If I spend 3k on a Specialized Roubaix and claim back the VAT as it's "company transport" will it seriously pass muster? Seems unlikely..... (but I'd love to be corrected!).

rpd_steve

No. You must comply with the requirements of any given cycle scheme. £1k max for most, payments MUST be taken out of PAYE earnings over 12 months and the company retains ownership of the bike unless payments have been completed. If you wanted a £3k bike then you could put £1k towards it.

Also the emplyee does not at any point 'own' the bike, the employer does. Think of it as renting the use of the bike. The employer ma then choose tp sell the bike at its HMRC market value to the employee - whic after 5 years is nill.

http://www.cyclescheme.co.uk/employers/ ... mrc-update

navrig

maxandpaddy wrote:

Hello, I am currently on the cycle to work scheme, my weekly wage deducts £19.00 a week but it is actually £13.00 after tax, for a £1,000 pound bike which works out at £676.00 pound over 12 month, not sure if there is a settlement figure at the end of the 12 month period.

You will have two choices. Take ownership of the bike and pay tax on the residual value as a benefit in kind or allow C2W to retain ownership for a further 3 years on payment of an admin fee of about £80. The bike will automatically become yours after the 3 years.

pdw

unixnerd wrote:

I'm a director of my own ltd company. If I spend 3k on a Specialized Roubaix and claim back the VAT as it's "company transport" will it seriously pass muster? Seems unlikely..... (but I'd love to be corrected!).

If you buy the bike you can't do anything, but if your company buys the bike, makes it available to you, and you use it primarily for work purposes, then yes. More interesting than the VAT saving is that it's effectively coming out of your gross income.

Provided that you're not making payments to the company for the bike, there's no rental agreement so I don't believe that the usual £1k limit applies.

pdw

Ringo 68 wrote:

RPD Steve wrote:

That said if by self employed you mean she is a director in a Ltd. company that she started/runs then she is considered an employee of that company and not self employed. In short employed people pay tax via PAYE, self-employed people do it via a Tax self assessment.

Hope it helps!

I think this fits the bill. My wife is a director of a Ltd company but she pays herself a wage every month (minimum wage I think)

If it's minimum wage, then you can't do payments via salary sacrifice, as it'd take you below minimum wage. On the other hand, if it's your/your wife's company then there's no need to make payments at all. There's nothing that requires the company to recover the costs of the bike from the employee.

mouth

Am I right in saying that HMRC have the right to make sure you're using the bike for fit and proper purpose ie making a regular effort to use it to get to work? In which case Mrs. Ringo would effectively be in trouble for tax evasion? Wouldn't wanna put my old lady in that position.