cyclescheme (again) final payment

mmuk
mmuk Posts: 398
edited December 2012 in Road general
I have done a search, but am still not sure, so looking to you good people for a little guidance!

We have a self administered scheme - at the end of the first year, if the company agrees to lease the bike to me for a further 2 years, for no more payments (as I have already paid in full, anyway), and as long as I agree to be responsible for any maintenance, upkeep etc

then am I right that no final payment need be made?

MM

Comments

  • trek_dan
    trek_dan Posts: 1,366
    I think the term was "at the discretion of your employer" or similar when I read about it.
    Thankfully my work forgot all about the final payment.
  • FreeFlow Bikes
    FreeFlow Bikes Posts: 6
    I believe that the "Final Payment" is at your employers discretion as to whether or not they implement it.

    After the 12 month period the bike is yours to keep, it;s up to the work whether they ask for a "Final Payment" which I think is around 10%
  • smidsy
    smidsy Posts: 5,273
    From Inland Revenue Site

    If a cycle is transferred to an employee after a period of use as a benefit during which the exemption described in EIM21664 applied, the transfer may be taxable either as earnings within section 62 ITEPA 2003 or as a benefit (see EIM21667).

    In either case, as long as any payment that the employee makes for the cycle is equal to or more than the market value, there will be no tax charge under the employment income rules. If the employee pays less than market value, the difference will be taxable as employment income.

    Establishing market value of second hand cycles can be difficult, particularly as the amount that an employee can realise for a cycle in the course of a private sale may be rather higher than a cycle retailer would be willing to pay. In order to ease the administration of valuing cycles sold to employees, employers and employees may choose to use the simplified approach.

    So In English if you do not pay a final payment equal to the bikes current market value you are taxed as a benefit in kind.     Current guidance puts the £ at 18% for bikes upto £500 and 25% for bikes upto £1000 at the end of 1st year (which is typically what emoloyers do).
    Yellow is the new Black.
  • random man
    random man Posts: 1,518
    I've bought two bikes on Cyclescheme with the same employer. The first bike was bought in July 2010 and I made a final payment of £46.80 the following year. They said the marketable value was £200, so I paid tax on the difference.

    The second bike was bought in August 2011. I finished the monthly payments in September but have not been asked for a final payment, and have had nothing to say that the bike is mine. I'm happy to leave it at that.
  • pdw
    pdw Posts: 315
    then am I right that no final payment need be made?

    No. Even at three years, the bike is deemed to have some value. If the employer gifts the bike to you without a final payment, then it's considered a benefit and you owe some tax.

    Depending on the original price of the bike, it will be considered to have no value at either 5 or 6 years, and you can then transfer the bike for free. The official table should be here:

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

    But right now they seem to have broken the table on that page. There's an archived copy here:

    http://web.archive.org/web/20100821102944/http://www.hmrc.gov.uk/manuals/eimanual/EIM21667a.htm
  • Gavcb
    Gavcb Posts: 11
    I got a bike for 1k and was offered the chance to purchase it outright after 12 mths for about £250 or pay £65 to extend the lease for another 2 years. Not sure what happens after that but I'm hoping that it'll involve a nominal final settlement fee. Reckon I've paid almost the full 1k to loan the bike for 3 years so I won't be doing it again. Seems a but pointless to me. The next mean machine will be bought on interest free credit!
  • Briggo
    Briggo Posts: 3,537
    Gavcb wrote:
    I got a bike for 1k and was offered the chance to purchase it outright after 12 mths for about £250 or pay £65 to extend the lease for another 2 years. Not sure what happens after that but I'm hoping that it'll involve a nominal final settlement fee. Reckon I've paid almost the full 1k to loan the bike for 3 years so I won't be doing it again. Seems a but pointless to me. The next mean machine will be bought on interest free credit!

    I suggest read up on the scheme and look at how much you have actually paid, surprised you didn't before signing the papers.
  • Gavcb
    Gavcb Posts: 11
    Briggo wrote:
    Gavcb wrote:
    I got a bike for 1k and was offered the chance to purchase it outright after 12 mths for about £250 or pay £65 to extend the lease for another 2 years. Not sure what happens after that but I'm hoping that it'll involve a nominal final settlement fee. Reckon I've paid almost the full 1k to loan the bike for 3 years so I won't be doing it again. Seems a but pointless to me. The next mean machine will be bought on interest free credit!

    I suggest read up on the scheme and look at how much you have actually paid, surprised you didn't before signing the papers.

    Combination of my work flowering it up as a great staff benefit and feedback from others about how great it was. Not lost anything and it got me into the best sport I've ever ever known so I'm not complaining. Just saying that in my experience it wasn't the great deal I was led to believe and that in future I'd Find an lbs offering interest free credit instead
  • smidsy
    smidsy Posts: 5,273
    Gavcb wrote:
    . The next mean machine will be bought on interest free credit!

    You already did...AND got tax relief of the monthly payments :P

    Even is it still cost you £1k you still got the tax relief on that £1k.
    Yellow is the new Black.
  • Briggo
    Briggo Posts: 3,537
    Gavcb wrote:
    Briggo wrote:
    Gavcb wrote:
    I got a bike for 1k and was offered the chance to purchase it outright after 12 mths for about £250 or pay £65 to extend the lease for another 2 years. Not sure what happens after that but I'm hoping that it'll involve a nominal final settlement fee. Reckon I've paid almost the full 1k to loan the bike for 3 years so I won't be doing it again. Seems a but pointless to me. The next mean machine will be bought on interest free credit!

    I suggest read up on the scheme and look at how much you have actually paid, surprised you didn't before signing the papers.

    Combination of my work flowering it up as a great staff benefit and feedback from others about how great it was. Not lost anything and it got me into the best sport I've ever ever known so I'm not complaining. Just saying that in my experience it wasn't the great deal I was led to believe and that in future I'd Find an lbs offering interest free credit instead

    I'll say it again, look at how much you actually paid and see if an LBS can match that on interest free.

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