A friend of mine wants a new road bike so as his company does the c2w scheme he tried to purchase it through the scheme. He has however been turned down as the guy at his work looked into where he lived and said he wouldn't ride 50% of the time and that the Government are clamping down on people taking the pi$$!! Surely if he wanted to have a life style change and ride to work, it isn't down to them to say whether or not he would cycle the 25 miles to work or not is it?
The guy also said that it has changed and the benfits aren't as good as they were this year and he would have to pay a high amount at the end of the scheme.

Is this true or someone not being bothered to do the paper work and coming up with excuses?

Two issues there

said he wouldn't ride 50% of the time

He diesn;t have to ride 50% of the time: 50% of the use of the bike should be for commmuting. If he only rides it once in a year, that's 100% of the use.

The guy also said that it has changed and the benfits aren't as good as they were this year and he would have to pay a high amount at the end of the scheme.

I've heard rumours that The Taxman is not happy with the 5% final valuep ayment that most people seem to expect to be charged – as far as they're concerned a bike is probably worth 40% of the RRP at the end of the year so that's what you should be charged. DOing that kind of removes the incentive to use the scheme though, for me

EDIT: I asked our HR department about that recently and they confirmed that they've been basing things on 5% for the history of the scheme, obviously they can't guarantee that will continue as they're not allowed to tell you in advance 🙄

That'll be the death of the scheme then.
You'd save more with a descent discount for your LBS.

Would like to see really how many bought a bike for the first time to use it for commuting rather than cyclists using it to fund their latest offroad/road purchase 😉

*scarpers down to LBS for one last go before it gets canned*

But I thought you only got a descent discount on a DH bike.

Calling onion to the forum!

I've heard rumours that The Taxman is not happy with the 5% final valuep ayment that most people seem to expect to be charged – as far as they're concerned a bike is probably worth 40% of the RRP at the end of the year

But wouldn't that just be profit for your employer?

As far as I'm aware, you pay the complete cost of the bike from your pre-tax earnings, so I've never really understood where even 5% goes.

Anyone help?

I can see druid with his hands on his wee hips right now shaking his wee head

Ok… so if you are in the pleasant situation of paying ~40% tax you get ~40% off the bike at the time of purchase. So a £1000 bike costs £600.

Then at the end of the year the taxman asks for 40% of the RRP of the bike as fair market value or whatever, so you pay £400 quid.

In total you spend £1000 for a £1000 bike. You probably can't get a discount and have a bunch of paperwork to fill in too. Shirley shome mishtake.

at the end of our scheme bikes will be assessed for their market value with a min of 10% – this was approved by HMRC

Aaah! This may explain why our loooo-ooong awaited CTW scheme has just been shelved again, for twentieth time (I do a few hours a week at a local council run ski slope).

I phoned the lady who deals with it and she sounded utterly depressed and frustrated with the whole mess – she did say it was a tax issue which had put a spanner in the works this time.

City of Sunderland Council – sort it out!! Wouldn't mind so much, but we've got leaflets and posters all over the building exhorting us to get off our lazy, fat backsides and onto a bike!!! GRRR!1111!!

Soryy rant-hijack over.

Somebody correct me if I'm wrong, but I believe your company buys the bike and you make repayments from your PAYE before tax.

This may be facilitated via a third party company like cyclescheme or halfords, but the princple remains the same I think.

I don't know how the final payment is justified, but I'd be very surprised if HMRC were suddenly asking to raise it to 40%.

http://www.dft.gov.uk/pgr/sustainable/cycling/cycletoworkguidance/pdf/518054/

Onion that is a nonsense – if "genuine market value" were paid, it would cost more to buy a bike on the scheme than new.

The % is assessed by the condition of the bike, do you really think that many companies are likely to go to the effort of assessing the bikes at the end of the hire period ??

The employee would then be asked to categorise the condition of the bike on-line; below is a summary of the conditions:

I think the lowest is 5% for condition D, thats why most companies just stick to that. (taken from cyclescheme info)

Condition A: A cycle that has been ridden regularly but infrequently to and from work throughout the hire period. Predominantly used on the road or cycle paths for short distances.

Condition B: A typical commuter’s bike that has been used regularly and frequently, maintained and serviced, been cleaned and lubricated throughout the hire period. Some leisure use has occurred

Condition C: A cycle that has been regularly used for commuting all year round.  It has been used regularly for leisure that may have included off-road riding.

Condition D: A cycle that has been used frequently for commuting & leisure but without anything more than the minimum care necessary.  Large mileages would have accumulated on the bicycle and a reasonable percentage of these may have occurred off-road.

there is nothing stopping a company transfering an asset for a quid, however is that asset is worth more that that (true market value) then that would be a taxable benefit and the employee then that would be taxable

Nobody knows where the final value payment goes though?

section 9.3 in druidh's link is a bit of an eye opener- so there's no obligation to sell to the employee, and even the implication that the bike may be sold to the employee could scarper the contract. I know what I'd be doing if I owned the company. 😆

Anyway, a sale at 10% of the price makes a nonsense of the oft spouted theory that a bike loses 50% of it's value in the first year.

As far as I'm aware, as an employer if you open the scheme to one person you are obliged to open it to all employees, from the cleaner to the MD.

They can't discriminate.

All sounds a bit depressing…..

I did OK out of the scheme, very happy with my purcahse and do in fact regularly cycle to work – the fact that I have a garage full of other bikes that could have done this prior to the scheme is neither here nor there I suppose….

But, some do take massive liberties – I seem to recall reading on this very forum a few years ago that two guys bought snowboards on the scheme – all you have to do is put the paperwork in front of your line manager who may not be a cyclist. Do Burton make just snowboards or bikes as well???? My Satacruz Superlight could have just have easily have been a SC snowboard. I presume the shop they bought from had a snowsports section as well as a bike section.
Still, maybe they live at the top of the caingorm and ride their boards down to the office in Aviemore…. then take the summer off.

I suppose that sort of thing is pushing the boundaries!

As far as I'm aware, as an employer if you open the scheme to one person you are obliged to open it to all employees, from the cleaner to the MD.

They can't discriminate.

but you can offer different terms to different people, more info on the hmrc website

buying snowboards is properly taking the p1ss. It makes me feel a lot better about never riding my R2W purchase to work (I use a shonky singlespeed for that, obviously).

Its pretty easy to argue your bikes worth next to nothing.

If its been used a lot, it could need a new drivetrain, brake pad, rims may have worn through so new wheels, if its been crashed for safetys sake the bars might need replacing, saddle could have worn out. Suspension fork may need a full service (or new crown/uppers!) too.

If you got a bike shop to do that at RRP and charged labour on top, the bikes worth virtually nothing.

What I don't understand is that if you are 'hiring' the cycles then why are you paying the value of the products over the year?

Surely the cost of hiring the bikes should be the value of the bike minus the market value of the bike after the hire period. So if a £1000 bike is worth £500 after a year then you would pay the £500 difference over the year (give or take).

but there isnt any arguing for the value. you just get a letter through saying you owe us £x…

If the OP's mate wasn't wanting the bike in the spirit of the scheme then I don't see that he should feel too hard done by.

Would like to see really how many bought a bike for the first time to use it for commuting rather than cyclists using it to fund their latest offroad/road purchase

I bought my first and Only Road bike through C2W and have used it 99.99% for cycling to work, so yep I complied with the letter and spirit of the scheme, I'd say It fell under under "condition B" after a year, company charged me £50 for a £500 bike so %10 I suppose…

I don't think our HR are changing the terms for the next C2W run, but they are quite a "hands off" HR department…
The OPs issue Re: %50 percent of commutes beng by bike seems a bit much, our lot take it largely on trust it seems, that the bike will be used primarily for commuting, which those who have taken the scheme up seem mostly to have done, they specified no minimum quantity or number of journeys by bicycle…

terrahawk – Member
buying snowboards is properly taking the p1ss. It makes me feel a lot better about never riding my R2W purchase to work (I use a shonky singlespeed for that, obviously).

You're both tax evaders! I think the high-point is a canoe.

Your monthly payments are to lease the bike from your employer, who owns the bike.

If you want to keep using the bike after that lease term is up, you have to buy the bike at a fair market value.

What constitues a fair market value was always open to interpretation, but HMRC had said, I believe, that 5% of purchase price was what they considered fair, as they acknowledged that it's a bit of a fudge to make a government scheme work.

Its pretty easy to argue your bikes worth next to nothing.

If its been used a lot, it could need a new drivetrain, brake pad, rims may have worn through so new wheels, if its been crashed for safetys sake the bars might need replacing, saddle could have worn out. Suspension fork may need a full service (or new crown/uppers!) too.

If you got a bike shop to do that at RRP and charged labour on top, the bikes worth virtually nothing.

What he said,

If we did it,

And if the compaby decided to make a silly valuation,

What would happen if th ebike was written off in the meantime? The employee is supposed to have maintained it, but lets be honest, average joe is barely able to fix a puncture, a new rear wheel could be £150 if its been run flat (£50 rim, £25 spokes, £60 labour, all adds up)

I'm going to try for a horse. I will ride that to work and I will demand a corral.

If you want to keep using the bike after that lease term is up, you have to buy the bike at a fair market value.

or they can just keep leasing it to you at the same cost, or to another employee. They could revalue it then base the new lease costs on the new current value. Itis theri asset so that can do what they wish with it

snowboards?

it is exactly that kind of sh1t that will get the scheme stopped.

why cant people ever stick to the simplest of rules?

WRT tot eh fair market value payment, the is a little confusion on this.

Companies are free to charge what they like for the bike, but if what they charge falls short of what the perceived market value of the bike is, then the difference becomes a taxable benefit.

This means that you actually are only required to pay the TAX on the difference, not the difference itself:

£1000 bike
5% = £50 An employer can charge that to their employee (they can charge whatever they like)

Actual value of bike on market = £200 for instance. this leaves a £150 deficit – HMRC would like you to pay tax on this £150, (20% of £150=£30)

You pay a further £30 for the bike. It does eat more ito your savings on the scheme, but it's not as bad as everyone thinks.

Finally, HMRC guidance states that in order to comply, ALL employees MUST be offered the chance to join the scheme REGARDLESS of their location in relation to work (whats stopping you usuing a park and ride scheme, for instance?) –

I'd let your boss guy know that by not offering it to you, he is making the scheme for the whole company un-compliant.

not suprised, they knocked the similar computer scheme on the head after a couple of years.

Agree with everything Jimbo states

Poke that, HMRC are welcome to come and value my bike if they want.
I will not be volunteering to pay them anything.

25 mils on a road bike isn't really that far. and as said above you don't have to ride in 50%.

What annoys me most about the scheme and many other schemes that the Government run is that they are only available to employees if the employer takes it on.
I need to pay for child care and I read that I can claim an amount before tax for that, does my employer do that scheme – NO!
Do they do the cycle to work scheme – NO!
So I miss out and can't do anything about it other than TRY and convince my employer to do something about it!