C2W - More Excuses? - anyone heard this one before........

Maybe they need to put these people in charge of the scheme ?

http://www.faircare.co.uk/cycle-to-work.php

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Sadly it's true. In typical joined up Government whilst DFT has been recently pushing the Cycle to Work scheme, and launched the Cycle To Work Guarantee, the HMRC wishes to limit it.

As a bit of background the HMRC are concerned about how much NI is being lost to salary sacrifice schemes and are tightening them up across the board! Copied from another site:

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The issue that HMRC drew attention to on 18th December was the condition that bicycles must be 'generally available to all employees', some employers have fallen foul of this condition for three reasons:

The scheme was not open to employees aged under 18 as they could not enter into the credit sale agreement that facilitates the bicycle being loaned to the employee for a fixed period for a set weekly/monthly amount

The scheme was only offered as salary sacrifice and certain employees were unable to participate as to do so would have brought their wages below the level of the national minimum wage

Only employees at certain sites or offices were able to join the scheme

Enforcing the legislation with immediate effect is interesting not least for the message it sends out, Employers may not want to:

Arrange for an adult guarantor to allow under 18 year old employees to participate

Offer lower value bicycles or the loan of a ‘pool’ cycle to low paid employees with insufficient pay

Extend the scheme to all its sites because of the cost of administering more participants

HMRC said in their statement that any agreements entered into before 18th December 2009 would be allowed to continue unaltered until the end of the employee’s loan agreement but any subsequent agreements would not be considered as tax exempt unless the scheme rules weresuch that the “generally available” condition was met in full. Where cycle to work agreements were entered into after 18th December or were have to come into effect after 6th April 2010 and the tighter conditions were not met, the employee has received a taxable benefit that must be reported on the P11D and be subjected to Class 1A NICs.

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If I was an employer, given the hassle / cost of meeting the requirements, if I had any NMW employees or those under 18, I wouldn't bother with the scheme.

Rufus.

downwardslide wrote:

Presumably then this will effect all salary sacrifice schemes, for example the nursery vouchers scheme?

Going off topic, but this doesn't seem to impact childcare vouchers, in fact they specifically state that for Child Care Vouchers:

http://www.hmrc.gov.uk/helpsheets/e18.pdf

Available to all staff — the childcare support should be offered in a
scheme in which all employees are eligible to participate. The ‘available to all’
condition is not breached where workers who earn on or near the National
Minimum Wage (NMW) are unable to join an employer’s scheme due to the
requirement to safeguard payment of the NMW in full.

Also it doesn't have to at all locations:

"locations...where the scheme operates."

A cynic may suggest that cycle scheme costs the gov so should be stamped out, but childcare vouchers mean more people working and hence extra tax, so should be encouraged!

Rufus.

Just how many people does the Council employ that are under 18 or only earning minimum wage? Neither group jumps into mu head when I think "council employee"