To anyone asking if this will be applied retrospecively
You mean agreements currently running, or at the very worst, those completed this tax year - for the tax implications.
Bike Forum
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C2W Scheme - new Market Valuation guidelines published.
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You mean agreements currently running, or at the very worst, those completed this tax year - for the tax implications.Posted 1 year ago # -
Just read this on Bikeradar...
Unfortunately for commuters, another major change to the Cycle to Work scheme may be on the horizon. A recent European Court of Justice ruling means that VAT is now payable on retail vouchers bought via salary sacrifice schemes – such as the vouchers given to employees to pay for their Cycle to Work bikes.
This ruling hasn't yet been implemented in the UK, but if it is, businesses will no longer be able to recover VAT on the bikes (and are sure to pass the extra expense onto their workers) and may even be faced with some backpayments.
Figures from Halfords suggest that in just over 10 years, 400,000 people from over 25,000 firms have joined the Cycle to Work scheme.
Interesting.
Posted 1 year ago # -
nbt - you are right I was just assuming your employer would probably be inclined to sell it to you for the same or similar amount as the disposal value as they don't want to be left with the bike - should have stated but was in a rush.
Re: market value - it is always a theoretical concept as in the absence of an attempt to set something in the "open market" how can you be sure, the theory is that there is a willing seller and buyer, I would regard a willing seller to mean someone who explored a few avenues of sale including ebay - which plenty of businesses use to sell old equipment so HH I disagee.
Bikechain - that does not look good, will not effect most public sector users but will be bad for businesses. Had a very quick look at the decision and it would appear that the salary sacrifice is causing the problem - not the voucher so restructuring the typical arrangements to get round this appears tricky.
Posted 1 year ago # -
We've just had this from my employer
As you may be aware, the HMRC have published new regulations around the buy back value of all bikes purchased under the cycle to work scheme.To view a copy of the updates please visit http://www.hmrc.gov.uk/manuals/eimanual/EIM21667a.htm).
Cyclescheme has been developing and testing a simplified 'Condition Assessment' (CA) process. The aim of this process is to provide evidence of the condition and value of the bike at the time of offer of sale.
Cyclescheme will be phasing in the Condition Assessment process by applying it to all vouchers 'requested' after Thursday 30th September 2010. Vouchers 'requested' prior to this date will be subject to the existing Cyclescheme market value process.
Posted 1 year ago # -
As my previous employer was a Bank, they could not recover VAT anyway. As a result, we didn't get the VAT saving on our vouchers. However, we were allowed to get the equivalent value in goods (this was all through Halfords).
Posted 1 year ago # -
Mine ends in November so it'll be interesting to see what happens, not happy if I end up being charged 25% though as I think this makes the whole scheme very borderline!!
Whats a little odd is the suggestion that if you are responsible and look after the bike then you could be charged more than someone who rags it around and knocks heck out of it and can therefore claim it isn't worth as much as the HMRC guidance states. Completely stupid if thats the way it pans out!!
Posted 1 year ago # -
I think that my company (which does get mentioned in the articles in the press - sorry everyone) is one of the test subjects for the new Condition Assessment that trickydisco's employer mentions.
We've had to take our bikes back to our lbs to be "independently" assessed for their condition, which ranged from Cat A (never been ridden) to Cat D (ridden constantly with minimal maintenance).
If you look into the guidance a bit more, there is a section that says that a lower-than-fmv final payment can be used if justified. I understand that Cyclescheme used to get people to self-assess, but an assessment by the lbs may well be Cyclescheme's attempt make a lower payment more justifiable/accountable.
We're due to have our final payments confirmed this week so fingers crossed.
Posted 1 year ago # -
mine ends in september, and thankfully the legal team are cyclists so will be looking to make this work for everyone. Best solution for me is to pay a nominal "purchase" price, and then take the tax hit as a BIK.
In all honesty, if HR departments don't take this route they will be dealing with some peed off staff, as the new guidance suggests that the more they charge as a "purchase" price at the end, the more it costs the employee, which wasn't clearly defined at the outset of the scheme.
Muttley - that's an interesting way of doing it, but that will heavily penalise those that look after their bikes. Mine does about 400 miles a month commuting, mostly in the dry and I've looked after it well, with full maintenance and servicing, and it could pass as an almost new bike. That's because I enjoy riding a bike and don't want some shitter under me that's not fun to ride and will be wearing itself away with grinding paste. To be penalised for that compared with some scumbag who just rides their bike round the park in all weathers isn't right as we all entered the scheme on the same basis, and the condition of the bike at the end was never a factor. Hell, if it is, mine might well have a frame destroying crash that renders it value less.
Posted 1 year ago # -
pk - we did query it being a tad unfair on those who'd looked after their bikes. Apparently to account for this the lbs' were briefed to assess the condition of the bikes' original parts, so if anything had been replaced it would be assessed as being unserviceable/poor condition.
Posted 1 year ago # -
...or if you've got some old worn out bits just swap them on before the inspection. Of course this could be seen as tax evasion and I couldn't possibly condone that
Posted 1 year ago # -
This has been sent to work, things perhaps dont look quite so bad.
Cyclescheme Response to HMRC EIM Updates EIM 21667/21667a
16 August 2010
First and foremost, don’t panic!
Contrary to initial reactions to the publication of the updates, Cyclecheme would like to reassure our clients that we have a process in place that ensures our schemes continue to be compliant, whilst retaining their attractiveness to employees and employers alike. (To view a copy of the updates please visit http://www.hmrc.gov.uk/manuals/eimanual/EIM21667a.htm).
According to the updates, employers charging ‘disposal values’ lower than those described in the Valuation Table will be required to catalogue evidence of each bike’s condition and value at the time of offer of sale.
Cyclescheme has developed a simplified 'Condition Assessment' (CA) process in response to the guidance that was published by HMRC in December 2009.
The process provides the required evidence of the condition and value of the bike at the time of offer of sale.
It is only in the absence of any evidence, employers need refer to HMRC’s Valuation Table for acceptable ‘disposal values’ as an ‘administrative easement’.
Cyclescheme performs this free service for the majority of our clients whereby we handle the transfer of ownership of equipment to scheme participants at the end of the hire period.
This service relieves employers of considerable administrative burden at the end of the hire period.
As part of our service we contact all scheme participants near the end of their hire period and they report on the condition of the bike using our simple and comprehensive Bicycle Condition Guide.
Scheme participants can complete this process online via the Cyclescheme Extranet.
The condition categories have been established using our own extensive industry experience, consultation with our Independent Bicycle Dealer network, and a resultant ‘Store Survey’.
The condition assessment is based on 4 condition categories, A, B, C & D.
Once the condition has been ascertained Cyclescheme sends the participant an invoice for the market value.
In accordance with HMRC guidance contained in EIM 21667a, Cyclescheme’s condition assessment process provides 'contemporaneous evidence of the amount for which that type of cycle in that sort of condition would have realised in a private sale'.
In short, using our fully automated process negates the need to use HMRC's Valuation Table.
Appreciating that the market value invoices may exceed current participant expectations and in order to maintain the scheme's economic attractiveness, participants may be given the option to extend the hire period with Cyclescheme.
If the hire period is extended Cyclescheme will contact the employee and may offer ownership of the bicycle at the market value (MV). The market value cannot be stated prior to the end of this period but should be less than the valuation arrived at for bikes in categories A, B and C in the condition assessment.
Cyclescheme will be phasing in the Condition Assessment process by applying it to all vouchers ‘requested’ after Thursday 30th September 2010.
Vouchers ‘requested’ prior to this date will be subject to the existing Cyclescheme market value process.To request further details of our new Condition Assessment process please email us on info@cyclescheme.co.uk with the subject line ‘HMRC EIM Updates’, and please include the employer name and the following information;
Posted 1 year ago # -
Our administrator is recommending not to transfer ownership until years 3 or 4
Posted 1 year ago # -
Nose, that's just the problem - my bike would be valued by a shop at between 1k and £1200 as it's an £1800 bike that I've used since beginning of April as that's when it arrived. And it's been well maintained and kept mint by me.
So, does that make it 25% as it's an "a" grade or does it take the full and fair Market value? Given that I've already paid the £1800 value, albeit pre-tax, so say, £1100 after tax, chucking another £1k just to buy the bike makes it £2.1k and 117% of the true cost, and 130% of what I would have paid after factoring in my club discount.
That would be shit.
Posted 1 year ago # -
Toons, that's reasonable but until ownership is transferred you cannot take part in another cycle to work scheme as you won't be deemed to have finished the current one.
Posted 1 year ago # -
Pk-ripper how many bikes do you want?
Posted 1 year ago # -
I change my commuting bike at least annually so it never gets shagged out
Posted 1 year ago # -
not anymore
Posted 1 year ago # -
Pk - 'Cyclescheme will be phasing in the Condition Assessment process by applying it to all vouchers ‘requested’ after Thursday 30th September 2010.
Vouchers ‘requested’ prior to this date will be subject to the existing Cyclescheme market value process'.
Does that not mean that if you already have the bike through cyclescheme then you will pay the 5% of purchase price plus vat?
Or have i got it wrong?
Are you with cyclescheme as i thought most were 1000gbp limit?Posted 1 year ago # -
Am with halfords, but am guessing they'll standardise the process to get it agreed by hmrc. Was thinking more about future options than anything else.
Will probably end up getting a 600 allez or something and killing it over a year
Posted 1 year ago # -
Well it would be a terrible shame if your bike got stolen a month before your cycle to work scheme ran out. I guess 25% of nothing is nothing and of no taxable benefit whatsoever....
Posted 1 year ago # -
Pinkstiffee - Member
Well it would be a terrible shame if your bike got stolen a month before your cycle to work scheme ran out. I guess 25% of nothing is nothing and of no taxable benefit whatsoever....Except that you are obliged to ensure that the bike is insured while it is in your custody and make good any loss to your employer.......
Posted 1 year ago # -
Doh! Lol
Posted 1 year ago # -
I was looking at this new final valuation process today and think I have found a cunning way around it.
The 25% valuation dosent apply to clothing or equipment not fitted to the bike.
therefore I can charge less for the bike and more for the clothing.
e.g. if someone bought a bike (£700) and a jacket (£25) for £725 total
If i charged £325 for the jacket and £400 for the bike then the final valuation is based on the £400 for the bike.
The guidelines dont tell you what the market value of the bike should be when you buy it.
Besides, as a retailer I can charge what I like for the products I sell.Posted 1 year ago # -
Ok So Im about to jump on the Cyclescheme, My company says that its a 2 year hire period but you only pay for the first 12months so what final payment % does that leave me?
Posted 1 year ago # -
Without going and reading the hmrc doc again I'm sure the 24 month payment is 18%.
The way to do it is to get a condition assesment set up as per Cyclescheme's process or indeed just let them facilitate the final payment process. Yes, the company looses out on the winfall at the end of the loan period but in the scheme of things is all the paperwork and hassle worth the small percentage return? It all depends on the company's reasons for doing it. I had 100 people take the scheme on this time. The cost of the bikes was £85k so at a 5-10% return (condition C or D) is it worth the hassle? Our finance dept thought not. ( they may just be lazy?):DPosted 1 year ago # -
Charge the last few years to the employee at £1 a year until the bike is worth £0 on the gov valuation.
Posted 1 year ago #
Topic Closed
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