Cycle to Work- rich people's tax perk?

corriebee1

I am the ultimate C2W convert.

I hadn't ridden a bike for years. I tried a couple of times from the park n'ride (3 miles) on an old mountain bike.

I had friends who were into road cycling and wanted to give it a go, but in the depth of a recession (working in property) i wouldn't have bought an expensive road bike myself.

I used the C2W to buy a nice carbon Felt, loved the experience of riding it and have commuted several thousands of miles over 3 1/2 years since. I make a 40% tax saving on it and that (along with monthly payments) was a big part of the attraction.

C2W has served a purpose for me. Did i NEED the discount? Probably not. Would i have become an enthusiastic cycling commuter without it? Probably not. I'd likely still be driving into central Cambridge, adding to the problem and a lot less fit.

kingstongraham

Fair enough. So what's the best way of getting a 40% discount available to everyone along with the salary sacrifice?

dhope

KingstonGraham wrote:

Fair enough. So what's the best way of getting a 40% discount available to everyone along with the salary sacrifice?

Well it's not a salary sacrifice if it's a flat 40% for everyone.
Make it different and suddenly companies have to start treating it differently from childcare vouchers, company cars, pension contributions etc and then there's different paperwork for everyone so it probably stops being included in most benefit schemes.

It works currently and it's simple. It's fair in as much as taxes are, which is another argument entirely

kingstongraham

A system where a company (that doesn't want to own a bike) buys a bike, loans it to an employee, but the employee treats it as their own, pays the company back the price of the bike over a year but then doesn't actually own it until several years later, unless they leave the company when they have to pay a bit more to the company. That's the simple option for promoting greater ownership and use of bikes?

dhope

Yes, it's pretty simple in practice.
You tried to make it sound complicated and it still only took 4 lines to explain. 3 if you remove the question at the end.

tgotb

KingstonGraham wrote:

A system where a company (that doesn't want to own a bike) buys a bike, loans it to an employee, but the employee treats it as their own, pays the company back the price of the bike over a year but then doesn't actually own it until several years later, unless they leave the company when they have to pay a bit more to the company. That's the simple option for promoting greater ownership and use of bikes?

It works. It's relatively to incorporate into companies' existing benefits packages. If you think it's too complex, how do suggest it should operate?

Judging by the number of people who have started cycling to work since buying bikes through the scheme, it seems to be quite effective.
- People with a lower disposable income can get a few hundred quid's worth of bike for less than £10 per week.
- People with a higher disposable income can buy a shiny £1k toy. I've spoken to people who have started commuting on £1k bikes, incentivised by the chance to play with their new toy; these people readily admit they probably wouldn't have bothered with a £300 bike.

In either case, the fact you typically need to arrange the bike through a benefits package gives employees an impetus to get the bike at the start of the benefits period, to avoid "losing out". Without that impetus, a lot of people would procrastinate buying a bike, in many cases indefinitely.

dhope

^^ indeed

And the employer can't give them the bike straight away because most employees wont fancy blowing the cost of the bike in 1 paycheque when they could spread it over the year. So it has to be a loan. Then you can only gift the bike when it's worthless, hence the nominal pound or so for the extra loan period once the initial payments are up.

It does just work. It's fine.

kingstongraham

TGOTB wrote:

It works. It's relatively to incorporate into companies' existing benefits packages. If you think it's too complex, how do suggest it should operate?

It must just be me.

Off the top of my head - give a discount on the bike if bought through the scheme, then when it has been paid for by the employee, the employee owns it outright. Deductions can be made from post tax income to pay off the loan. Or if made via salary sacrifice, then a relevant amount included as a taxable benefit.

That way it would encourage 0% and 20% taxpayers as much as 40% taxpayers.

father_jack

There should be fingerprint scanner and GPS & tracker, if you don't cycle to work everyday even in 70mph storms you get put in prison for the rest of your life.

bendertherobot

KingstonGraham wrote:

TGOTB wrote:

It works. It's relatively to incorporate into companies' existing benefits packages. If you think it's too complex, how do suggest it should operate?

It must just be me.

Off the top of my head - give a discount on the bike if bought through the scheme, then when it has been paid for by the employee, the employee owns it outright. Deductions can be made from post tax income to pay off the loan. Or if made via salary sacrifice, then a relevant amount included as a taxable benefit.

That way it would encourage 0% and 20% taxpayers as much as 40% taxpayers.

Who's paying for the discount? If it's a benefit it's taxable. How would it encourage those who pay 20% tax by taking the payment out after tax has been deducted?

kingstongraham

bendertherobot wrote:

KingstonGraham wrote:

TGOTB wrote:

It works. It's relatively to incorporate into companies' existing benefits packages. If you think it's too complex, how do suggest it should operate?

It must just be me.

Off the top of my head - give a discount on the bike if bought through the scheme, then when it has been paid for by the employee, the employee owns it outright. Deductions can be made from post tax income to pay off the loan. Or if made via salary sacrifice, then a relevant amount included as a taxable benefit.

That way it would encourage 0% and 20% taxpayers as much as 40% taxpayers.

Who's paying for the discount?

Me, same as now.

bendertherobot

KingstonGraham wrote:

bendertherobot wrote:

KingstonGraham wrote:

TGOTB wrote:

It works. It's relatively to incorporate into companies' existing benefits packages. If you think it's too complex, how do suggest it should operate?

It must just be me.

Off the top of my head - give a discount on the bike if bought through the scheme, then when it has been paid for by the employee, the employee owns it outright. Deductions can be made from post tax income to pay off the loan. Or if made via salary sacrifice, then a relevant amount included as a taxable benefit.

That way it would encourage 0% and 20% taxpayers as much as 40% taxpayers.

Who's paying for the discount?

Me, same as now.

I'm sorry, I don't follow. If you're paying for the discount then there's no discount.

kingstongraham

bendertherobot wrote:

KingstonGraham wrote:

bendertherobot wrote:

KingstonGraham wrote:

TGOTB wrote:

It works. It's relatively to incorporate into companies' existing benefits packages. If you think it's too complex, how do suggest it should operate?

It must just be me.

Off the top of my head - give a discount on the bike if bought through the scheme, then when it has been paid for by the employee, the employee owns it outright. Deductions can be made from post tax income to pay off the loan. Or if made via salary sacrifice, then a relevant amount included as a taxable benefit.

That way it would encourage 0% and 20% taxpayers as much as 40% taxpayers.

Who's paying for the discount?

Me, same as now.

I'm sorry, I don't follow. If you're paying for the discount then there's no discount.

No, I meant me, as in a taxpayer.

bendertherobot

You say "give a discount" on the bike then pay for it by deduction in your intended scheme.

Where does the discount come from?

kingstongraham

bendertherobot wrote:

You say "give a discount" on the bike then pay for it by deduction in your intended scheme.

Where does the discount come from?

How about the bike shop could claim it from the government.

bendertherobot

KingstonGraham wrote:

bendertherobot wrote:

You say "give a discount" on the bike then pay for it by deduction in your intended scheme.

Where does the discount come from?

How about the bike shop could claim it from the government.

Right. So, the previous system, which costs X in "lost tax revenue" now costs Y in actual government payments (plus administration).

dhope

Plus an admin overhead for every bike shop

Daz555

bompington wrote:

The top 1% of earners in the UK pay over 25% of all the income tax, a proportion that is going up under the current government.

True. Tells us all we need to know about income inequality in the UK - well across the globe really.

surrey_commuter

Daz555 wrote:

bompington wrote:

The top 1% of earners in the UK pay over 25% of all the income tax, a proportion that is going up under the current government.

True. Tells us all we need to know about income inequality in the UK - well across the globe really.

Or does it tell us the UK has a progressive income tax regime

rick_chasey

Surrey Commuter wrote:

Daz555 wrote:

bompington wrote:

The top 1% of earners in the UK pay over 25% of all the income tax, a proportion that is going up under the current government.

True. Tells us all we need to know about income inequality in the UK - well across the globe really.

Or does it tell us the UK has a progressive income tax regime

Who knew.

surrey_commuter

Rick Chasey wrote:

Surrey Commuter wrote:

Daz555 wrote:

bompington wrote:

The top 1% of earners in the UK pay over 25% of all the income tax, a proportion that is going up under the current government.

True. Tells us all we need to know about income inequality in the UK - well across the globe really.

Or does it tell us the UK has a progressive income tax regime

Who knew.

So if we allow for 30 million earners that means the top 300,000 pay 25 % of all income tax. I have a solution. If we Brexit then 100,000 of them will relocate meaning that the top 1% of earners will now pay 15% of all income tax. That will give us a fairer society which will make the increased tax bill for the rest of us well worth paying

bompington

The thing is, the traditional left-wing view of economics is that it is a zero-sum game: if one person is £10K richer, somebody else must be £10K poorer. I suspect that a lot of people actually think this subconsciously.

But this completely discounts the idea of wealth creation, and the complete lack of success of socialist economies (where everyone winds up poorer) shows that simply attempting to redistribute wealth is doomed to fail.

surrey_commuter

bompington wrote:

The thing is, the traditional left-wing view of economics is that it is a zero-sum game: if one person is £10K richer, somebody else must be £10K poorer. I suspect that a lot of people actually think this subconsciously.

But this completely discounts the idea of wealth creation, and the complete lack of success of socialist economies (where everyone winds up poorer) shows that simply attempting to redistribute wealth is doomed to fail.[/quote

If post- Brexit income tax revenue goes down £15bn a year then let's hope they are right :roll:

pblakeney

I'm confused. (As usual).
So getting people to cycle to work instead of driving is a bad idea?

surrey_commuter

PBlakeney wrote:

I'm confused. (As usual).
So getting people to cycle to work instead of driving is a bad idea?

Yes if they pay a higher rate of tax than you

First.Aspect

PBlakeney wrote:

I'm confused. (As usual).
So getting people to cycle to work instead of driving is a bad idea?

No, its okay if your bike is cheap. But if your commuting bike cost more than a grand, you are an idiot because its bigger and more polluting.

Mine cost £3k, so I'm catastrophically stupid. I should instead do most of my cycling on a BSO, because that's more environmentally friendly, and socialist.

Thick Mike

Nationalise bikes! UK cycle industries model 1 issued to every citizen at age 14.

Model 2 at 18.

father_jack

PBlakeney wrote:

I'm confused. (As usual).
So getting people to cycle to work instead of driving is a bad idea?

They're not using it to cycle to work. They're using it to get a tax perk to buy a item they use in their own time, for their own hobby, for the weekend.

No different if I got a £3000 high end gaming computer tax free...oh yeah I use that for "work" because I sent an email to work once... :roll:

pblakeney

Father Jack wrote:

PBlakeney wrote:

I'm confused. (As usual).
So getting people to cycle to work instead of driving is a bad idea?

They're not using it to cycle to work. They're using it to get a tax perk to buy a item they use in their own time, for their own hobby, for the weekend.

No different if I got a £3000 high end gaming computer tax free...oh yeah I use that for "work" because I sent an email to work once... :roll:

That is an assumption on your part. I spent £2.5k on a bike and gear, to commute.
I will not buy cheap stuff to make others happy. I also got a high end laptop so nah nah nah.

bendertherobot

Someone needs a hug.