C2W Scheme - Consumer Credit Licence? (CCL)

andyh01

Hey, Anyone in the know on C2W scheme and whether the £1000 limit is still applicable?
Reading I've done suggest the £1000 was due to the fact that the Office of Fair Trading (OFT) saw C2W as hire purchase and therefore credit licence was required, under the laws of Consumer Credit Act (CCA) as such the OFT issued a group wide CCL for the C2W, so individual employers didn't need to apply separately for the CCL under CCA law. This licence was issued in 2010 and was valid for 5 years so now ended. The OFT was disbandment and now the Financial Conduct Authority (FCA) took over the OFT role.

Am I right in thinking the FCA now doesn't class the C2W scheme as consumer credit hiring and therefore, no licence is required, which means there is no limit on the amount that can be put onto the C2W scheme? Or if CCL is still required if the employer is already registered with the FCA would they still need a separate licence/bolt on for the C2W, if offering above the £1000 limit and if so has anyone got a link to the new current CCL please...?

Thanks

The Rookie

HMRC still say a CCL is needed for bikes over £1K.

The bizarre thing of course is that the tax break rules make it 100% clear it is NOT hire purchase but merely rental.

Perhaps some background to your individual situation is important, most the scheme organisers still cap at £1000 so even if it weren't applicable it wouldn't make any odds.

andyh01

Where does it say that in the HMRC rules?
The only stuff I can see relates to old OFT rules and the section 9 also has a link to the old licence. The limit of £1k was due to their being issued a c2w group wide CCL.... Which I can't find the current one that hasn't expired.

My employer self administrates to the extent that I place an order for said bike and my employer will then contact whoever and pays for it with a credit card and deducts from my salary.
I work for an FCA authorised company so not sure if ccl is required anyway nor am I sure if they actually have a ccl and what the limit is (I think they are now unlimited anyway) so I can't see there being an issue - I just to clarify somehow to the guy running it that it allowable. I can put too but wouldn't get the tax benefit of the amount above the £1k I don't want lose out when no reason to and will effect my decision making.

The Rookie

Its in the current HMRC guidance document (HMRC don't make rules - they apply the law).
https://www.gov.uk/government/uploads/s ... idance.pdf
Section 9.

andyh01

Yeah that's the old version by the OFT which has now been disbanded and the licence it refers too if you go to it, has been achieved and if you bring the licence up it expired in 2015... U can't find a replacement anywhere...

andyh01

Having contacted the FCA directly I am more confused then I was before.
Under the old OFT they classed it as a hire agreement and therefore issued the group wide consumer credit licence to facility the C2W scheme up to £1000, for employers to save them having to individually apply for the licence and therefore no exemption from the Consumer credit licence was applicable for any amount.

The FCA view appears to me, to exempt the C2W schemes (up to £1000?), from the consumer credit act, thus no consumer credit licence being required if the C2w is just to the £1k.However, for C2W schemes offering over a £1000 limit, may still require to have a consumer credit licence, as this could be deemed to be a hire purchase agreement?

The FCA reply was;

I can confirm that our FCA handbook, and in particular our Perimeter Guidance Manual (PERG) does cover those persons who are exempt for credit-related regulated activities. This includes the 'cycle to work scheme' as explained in PERG 2.11.3. I've extracted this section below for your convenience and provided the link below that.

"Cycle to work

PERG 2.11.3G 01/04/2014

This exemption applies to a scheme under which an employer provides or makes available to their employees a cycle or cyclist's safety equipment up to the value of £1,000 (which is designed to allow employees to take advantage of section 244 of the Income Tax (Earnings and Pensions) Act 2003). An employer does not require authorisation for the regulated activities relating to regulated consumer hire agreements just because it operates such a scheme.

www.handbook.fca.org.uk/handbook/PERG/2/11.html

Please note the limit mentioned, which means that over the £1,000 limit may require the employer to become authorised. The firm will need to seek its own external legal advice if it requires any further guidance on this rule.

section 244 of the Income Tax (Earnings and Pensions) Act 2003). is as follows;

244 Cycles and cyclist’s safety equipment
This section has no associated Explanatory Notes

(1)No liability to income tax arises by virtue of Chapter 10 of Part 3 (taxable benefits: residual liability to charge) in respect of the provision for an employee of a cycle or cyclist’s safety equipment if conditions A to C are met.
(2)Condition A is that there is no transfer of the property in the cycle or equipment in question.
(3)Condition B is that the employee uses the cycle or equipment in question mainly for qualifying journeys.
(4)Condition C is that cycles are available generally to employees of the employer concerned or, as the case may be, cyclist’s safety equipment is so available to them.
(5)In this section “cycle” has the meaning given by section 192(1) of the Road Traffic Act 1988 (c. 52), and “cyclist” has a corresponding meaning.

Apparently there is a further exemption that could apply for certain class of person from what I understand but awaiting further response from the FCA is in the event of a closed scheme such as in this case where the employer self-administrates, the hire purchase agreement and therefore a closed scheme and only available to employees and not general public at large, would exempt it from requiring a licence. I guess if the scheme is administrated by 3rd party and open to more than one employer this wouldn't be exempt?