I pay myself the minimum amount via PAYE (circa 670 a month) and the rest in dividends.. am I understanding right that to receive any C2W benefit I would have to up my PAYE to a taxable rate and then I’d save the tax and benefit from the scheme?

Thanks!

Been wondering about this too.

Why only £670? Not paid myself anything yet, been too busy to sort it out yet (been contracting as a Ltd company for 3 months).

or…

have the company buy the bike. Claim VAT back and put the cost of bike through the company.

Company retains ownership of bike and you can’t claim milage.

670ish is the sweet spot to take paye and the rest as dividends lots of articles on it
Company isn’t vat registered but thinking about doing flat rate that’s why not

have the company buy the bike. Claim VAT back and put the cost of bike through the company.

Company retains ownership of bike and you can’t claim milage.

This is what we do – it’s using the same tax law that allows Cycle to Work to be used.

Does your job present situations where you might actually C2W?

My accountant said you can’t do it if you work from home.

😳

Company buys the bike, depreciates it over say 3 years to nothing (while you use it). Then when its worth nothing you take it off the company.

Cost of depreciation and bike are costs that lower your companies profits so you pay less tax.

Like any asset your company buys and uses, its a cost so it lowers your profit which is taxable.

same as above, I’m a small ltd company, company bought bike and loans it to me, no salary sacrifice.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/11305/cycle-to-work-guidance.pdf

” 5) Setting up a Cycle to Work Scheme To help employees take advantage of this tax-free benefit, an employer can simply buy a cycle and cyclists’ safety equipment and loan it to an employee for qualifying journeys to work. This arrangement means that the employee’s normal salary arrangements are not affected and is sometimes referred to as a ‘salary plus’ arrangement. It may be, however, that the employer wants to recover the cost of providing the cycle and safety equipment loaned to the employee. Usually this would
be done through a salary sacrifice arrangement. ”

This is what we do – it’s using the same tax law that allows Cycle to Work to be used. [/I]

+1 and no limit on how much you spend, nor how long you keep it (if sold money goes back into business}

reduces your corporation tax too 🙂

Good timing…been thinking about how to do this too.

I work for a client in the city 2-3 days a week. Used to commute via a SS for years before I went self employed and really miss it. Result!

Now to decide what bike best suits the business…!

I’ll be doing this soon, did it when I was a sole trader but now limited.
Will be getting a Brompton, vat off and depreciated over 3 years rather than mileage.
Easy for me to prove it’s 100% use too as I don’t drive, have posh road/MTB bikes for pleasure and will use it from home to various different locations not an everyday commute to the same site.

I’ll leave it to the accountant to sort out but I doubt it will involve an actual BTW scheme retailer, salary sacrifice etc.

So what PaulGillespie above is saying, if I’m reading it correctly, is that my employer/company can buy a bike for me and give it to me as a “salary plus” style benefit? No need for me to pay anything? Do they claim back VAT etc and get it for less than RRP?

I’ve particularly liked the irony that both my C2W bikes, which ‘clearly’ wouldn’t be used for actual commuting because they have knobbly sticky tyres, 140 & 160mm Pikes, the full-sus has a DBair, and both have sub 66 degree head angles, have been used for almost all my commutes over the last two years!

I’m not sure the one wearing Shorty 3C 2.5 & 2.3 this winter will be on commuting duty until more sensible tyres go back on – they’d be great on the fun bit of the inbound commute but not a lot of fun on the tarmac climb home…

Groundskeeperwilly, That’s right. The company can buy the bike from any supplier for any price. The company pays that VAT but this is reclaimed at the next VAT return. The bike also reduces company profits so there is less corporation tax to be paid at the end of the year. So… the company gets a £1000 bike for £800 (cost minus 20% VAT) and then as profits have been reduced by £800 so that’s another £160 in less tax paid. So a £1000 bike will cost the company £640 in actual cash.

This is why the company “may” want to set u a salary sacrifice scheme to reclaim costs. My company didn’t want to do that so I still gt my normal salary and the bike.

Consider this scheme a little more and the company could buy multiple bikes and sell on old ones too or… old bikes could sit gathering dust in the workplace until they have depreciated enough for them to be written off. You could take the piss if you wanted with the scheme but i think you need to be prepared to justify the purchases should the company accounts ever be audited by HMRC.

the company gets a £1000 bike for £800 (cost minus 20% VAT) and then as profits have been reduced by £800 so that’s another £160 in less tax paid. So a £1000 bike will cost the company £640 in actual cash.[/I]

Gross £1000
Net £ 833

Corp tax saving £167

And don’t forget to factor in the income tax, employer and employee NI saving through not having to pay you the money to buy the bike from net pay.

So net pay of £1000 costs you a gross of £1530 and a company NI bill of £138.

Thanks PaulGillespie. This seems like a better way to do it for me. A bit of an eye opener actually.

Br, thanks for correcting my sums! was a long day 🙂

A good method I reckon, since staying below the personal tax threshold defeats the object of C2W. Couple of thoughts…

Won’t the VAT saving vary if you are on the flat rate scheme, depending on your declared industry percentage?

I believe the flat rate scheme allows for reclaim at 20% on capital purchases over £2K. In other words, it would be silly to buy a £1000 bike, when a £2000 bike would attract a better discount!

The net savings on NI are possibly a bit less too, if you are using the £670 rate to achieve an employer’s holiday on NI payments. I forget exactly how to do the sums for that bit though.

PaulGillespie – do we just ignore BIK here, or assume that it is effectively zero on a now depreciated asset?

Edit: another thought – can you get a better return by claiming 20p a mile? You’d need to do quite a few business miles I guess…

No BIK considerations. Think that’s the point of the C2W scheme, the Gov are trying to get more folk cycling so want to make it attractive.

Sorry, don’t have any experience of the flat rate scheme.

No ideas on the legalities but an accountant once told me you could loan yourself money , then default on the payments, the company then decides its too much like hard work to chase the debt, someone on here will know if this is a load of rubbish or not, so buy a bike decide on the repayments then default if it is above board.

was that not how footballers were getting paid for a while? pretty despicable way to avoid tax when you’re earning millions.

So I have a question!

I’m a sole trader that employs other people. I’ve done cycle to work so my wife can have a nice road bike as I technically employ her but I can’t use the scheme as I’m not paid a salary and am the employer not the employee.

Is there a way for me to work it. We aren’t VAT registered but I do actually cycle to work quite often!

Thanks in advance!