Cycle Scheme - Potential Equipment Loophole?

alexberry.pgt

Hi All,

1 year abo I bought a cyclescheme voucher for £1000 and bought with it the following:

Hydraulic Brakes £449.99
Mavic Wheels £540.00

The value less VAT is shown below.

Wheels £540 – VAT (20%) = £432
Brakes £449.99 – VAT (20%) = £359.99

After VAT is deducted both of the above components are values are less than £500 so the 4 year valuation package should be 3% and not 7% which is what Cycle Scheme are trying to charge me.

The difference is £28 vs £70

Given that this is not a bike, and it’s a components I purchased, the equipment should be valued under the “less than £500” category as its not a complete bike (noting that the table on HMRC doesn't reference certificate value).

All the HMRC guidance I can find (below) references complete bikes and not equipment - so I do think I have an argument here.

https://www.gov.uk/hmrc-internal-manual ... /eim21667a

Cycle Scheme are arguing that the final value is based on the voucher value and not what I actually purchased. Im intrigued to hear peoples thoughts on this who have experience of tax / finance.

The reason being that more and more people are buying parts / equipment / clothes on the cycle scheme which are not seemingly covered by the HMRC guidance.

cooldad

As it's a scheme to buy a bike, not bits, I assume the shop crooked the books a bit, as did you.

I'd shut up before they get you for tax evasion.

alexberry.pgt

Your wrong - you can buy bits on the bike to work scheme. For example wiggle has a fully dedicated website for buying bikes and parts. you can buy near enough anything you wish:

http://cycletowork.wiggle.co.uk/

joenobody

alexberry.pgt wrote:

you can buy bits on the bike to work scheme.

He's right. I believe they realised that people might not want to buy a new bike every year, but might want to buy new kit/components/etc to cover changing levels of use, wear & tear, etc.

cooldad

Really. It says: "Cycle to Work is a smart, cost effective and simple way to get a new BIKE, Clothing and safety related ACCESSORIES."

Their CAPS not mine. Says nothing about buying parts.

Perhaps that's why "All the HMRC guidance I can find (below) references complete bikes and not equipment..."

joenobody

alexberry.pgt wrote:

All the HMRC guidance I can find (below) references complete bikes and not equipment - so I do think I have an argument here.

The relevant bit might be this towards the bottom of the page:

In calculating the original price of the cycle, include safety equipment fitted to the cycle (such as lights and bells)

That could be taken to mean the total price of bike and/or components purchased.

joenobody

cooldad wrote:

Really. It says: "Cycle to Work is a smart, cost effective and simple way to get a new BIKE, Clothing and safety related ACCESSORIES."

Their CAPS not mine. Says nothing about buying parts.

Perhaps that's why "All the HMRC guidance I can find (below) references complete bikes and not equipment..."

Poor wording for sure. It could be argued that a new groupset is a safety accessory because running a worn out one could be dangerous. Same for wheels. Whatever the reasoning, it is possible to legitimately buy this stuff through the scheme. You can even use it to buy Rapha clothing (they made a big fuss about it when that was introduced), and that's hardly essential.

fenix

Is it time to close it down ? The original aim of the scheme wasnt to let people buy £500 sets of wheels surely ?

cooldad

Official description of what can be bought.

"2) What equipment is included under the tax
exemption?
Eligible equipment includes cycles and cyclists' safety equipment. The tax exemption
defines a "cycle" as 'a bicycle, a tricycle, or a cycle having four or more wheels, not
being in any case a motor vehicle' (192(1) of the Road Traffic Act 1988 (c.52)). An
electrically assisted pedal cycle can be included under the scheme.
Cyclists' safety equipment is not similarly defined in the legislation and a common
sense approach should be taken to the equipment provided. This could include:
 Cycle helmets which conform to European standard EN 1078
 Bells and bulb horns
 Lights, including dynamo packs
 Mirrors and mudguards to ensure riders visibility is not impaired
 Cycle clips and dress guards
 Panniers, luggage carriers and straps to allow luggage to be safely carried
 Child safety seats
 Locks and chains to ensure cycle can be safely secured
 Pumps, puncture repair kits, cycle tool kits and tyre sealant to allow for minor
repairs
 Reflective clothing along with white front reflectors and spoke reflectors
It is the employer's choice what safety equipment is offered, but you may wish to
confirm with your local tax inspector whether the equipment you provide falls within
the tax exemption. "

https://assets.publishing.service.gov.u ... idance.pdf

It's not a scheme to maintain your bike.

cooldad

Whatever it's a scheme to buy a bike, not parts of a bike.

timothyw

Planet X have knocked it on the head recently - said they aren't doing cyclescheme vouchers.

Ultimately I think so long as the person using the scheme does regularly ride to work I don't see any particular issue with them buying wheels, groupset, etc, and most retailers will be flexible about this if asked nicely.

There are plenty of ongoing costs if you do cycle to work which can't really be addressed by just buying another bike, however much we might joke about it (tubes, tyres, chain, cassettes etc etc)

Legally though, it's very much a grey area and I'd suggest the OP suck it up and perhaps just order the one or other item next time if they want to benefit from the sub £500 validation.

david7m

Didnt realise you brought a voucher; thought you had to take a quote to HR and the company would buy it for you, then it gets deducted from your salary before NI/Tax/Pensions? Interesting how you could use on what you like in store!
Dave

alexberry.pgt

Fenix wrote:

Is it time to close it down ? The original aim of the scheme wasnt to let people buy £500 sets of wheels surely ?

To be fair I cycle 16miles each way to work (32miles per day) from the peaks to my work in Salford. I do this every day come rain shine or snow. A new set of wheels and brakes was totally required for that level of commuting!

alexberry.pgt

david7m wrote:

Didnt realise you brought a voucher; thought you had to take a quote to HR and the company would buy it for you, then it gets deducted from your salary before NI/Tax/Pensions? Interesting how you could use on what you like in store!
Dave

I was given a £1000 voucher, I selected the parts on Evans website, popped in my cycle scheme certificate code, and job done. I could have bought anything that evans stocked on their website....

cooldad

Good luck debating it with HMRC.

thistle_

david7m wrote:

Didnt realise you brought a voucher; thought you had to take a quote to HR and the company would buy it for you, then it gets deducted from your salary before NI/Tax/Pensions? Interesting how you could use on what you like in store!

That's how we were told to do it when I got mine but that was 9? 10? years ago.
You didn't have to show the quote to anyone, but that was in theory so you had something to fall back on if the shop put the price of the bike up in the meantime (but turned out to be useless in most cases).
Now it's similar, but now if your employer is using the online system you just do put in a code, request your value and they email you a certificate when HR/payroll have approved it.

I saw something about now being able to buy components on the C2W scheme, but can't find a reference to it any more.

timothyw

Funnily enough, looking at the cyclescheme FAQs it looks like you can now get components - see https://www.cyclescheme.co.uk/help/faqs ... me-package under 'What Accessories can I get'

Components and parts - that keep your bike in great shape; pumps, puncture repair kits, cycle tool kits, tyre sealant, groupsets, wheels, cranksets, cassettes...

The only specifically noted exceptions are:

Please note - cameras and GPS computers are not allowed under the Cycle to Work scheme.

That's new to me. I wonder if this has recently been clarified by the government?

Either way, sounds like the OP might have a point on the taxable value.

rolf_f

TimothyW wrote:

Funnily enough, looking at the cyclescheme FAQs it looks like you can now get components - see https://www.cyclescheme.co.uk/help/faqs ... me-package under 'What Accessories can I get'

Components and parts - that keep your bike in great shape; pumps, puncture repair kits, cycle tool kits, tyre sealant, groupsets, wheels, cranksets, cassettes...

The only specifically noted exceptions are:

Please note - cameras and GPS computers are not allowed under the Cycle to Work scheme.

That's new to me. I wonder if this has recently been clarified by the government?

Either way, sounds like the OP might have a point on the taxable value.

I'm pretty sure that the changes were made quite some time ago - maybe a year or so since. It does make logical sense - best to encourage people to maintain things rather than just re-buy new all the time. Not sure I could be bothered to use Cycle Scheme to buy a puncture repair kit though!

cooldad

How about that, I'm obviously way out of touch. I retract my stuff. Bit weird that HMRC hasn't updated their site. Lazy slackers.

CitizenLee

thistle (MBNW) wrote:

david7m wrote:

Didnt realise you brought a voucher; thought you had to take a quote to HR and the company would buy it for you, then it gets deducted from your salary before NI/Tax/Pensions? Interesting how you could use on what you like in store!

That's how we were told to do it when I got mine but that was 9? 10? years ago.
You didn't have to show the quote to anyone, but that was in theory so you had something to fall back on if the shop put the price of the bike up in the meantime (but turned out to be useless in most cases).
Now it's similar, but now if your employer is using the online system you just do put in a code, request your value and they email you a certificate when HR/payroll have approved it.

I saw something about now being able to buy components on the C2W scheme, but can't find a reference to it any more.

That's the point I'm stuck at with mine. CycleScheme sent my company the invoice on the 16th July but it appears to be lost in the matrix somewhere. Doesn't help that we can't contact anyone directly in HR/payroll anymore, just generic email accounts. The first salary deduction has come off already though :roll:

The Rookie

Lets not forget how all the schemes treated it as a hire purchase scheme and then had to add the extra payments (noting they didn't reduce the 12 monthly ones at the same time which they COULD have done) when it was pointed out they were all operating the schemes incorrectly. So I wouldn't necessarily trust them to know how they should be working!

As for the first post, I thought the VAT deduction was knocked on the head a while back, like 2012?