I’ve never used this but working with a lass tonight who did.
She’s about 9 months into the 18 months. She was under the impression that at the end of the 18months she would have to pay a nominal amount to keep thebike.. £980 for bike and kit btw..
Now I’ve read a few things on here about the scheme changing and folk getting stung at the end of their agreement for much more money.. As a cyclist I’m supposed to know sbout this sort of thing apparently but I don’t have a clue!
Can someone fill me in on this so I can let her know? Don’t think shes gonna be happy though!

Ta.

I would say she would be liable to pay the tax on 21% of the bikes original value.

http://www.hmrc.gov.uk/manuals/eimanual/EIM21667a.htm

The tax man clarified the rules. You hire the bike for a monthly rental witht eh option to purchase for a fair value at the end of the rental period.

In the first year or two most people were only getting charged 5% to keep thebike but the taxman has pointed out tht that is too low a valuation and have given some guidence on wht the value should be

teh option at the end of the period are
1) pay the values – probably around 20% for 18 month but I ain’t sure
2)contine the loan period retal free until teh value is negligble – say for another 18 month

3)Pay tax on the amount she should have paid as a final fee so 21% of 20%. value

Not as Dibbs says on the new value but on the nominal value at the end of the rental

hve a search on here – its come up a few times

The valuation table

Age of cycle

Acceptable disposal value percentage

Original price of the cycle less than £500 Original price £500+

1 year 18% 25%

18 months 16% 21%

2 years 13% 17%

3 years 8% 12%

4 years 3% 7%

5 years Negligible 2%

6 years & over Negligible Negligible

How to use the valuation table
The original price of the cycle is the price for which it was on sale as new at the time when it was first provided to the employee. In salary sacrifice arrangements this price may be clearly referred to in the documentation. Cycles are normally acquired by employers at arm’s length from unconnected persons and where this is the case, either of the following can be accepted as the original price of the cycle:
the amount that the employer paid or was invoiced for the cycle or
the retail price of the cycle that was taken into account in working out any hire payments.

Dibbs is waiting for an apology from TJ but not expecting one 🙄

teh option at the end of the period are
1) pay the values – probably around 20% for 18 month but I ain’t sure
2)contine the loan period retal free until teh value is negligble – say for another 18 month

3)Pay tax on the amount she should have paid as a final fee so 21% of 20%. value

You missed one:
4) let the employer keep the bike (and rent a new one)

Dibbs is waiting for an apology from TJ but not expecting one

Oops – I read it as pay tax of 21 % not on 21%

So you can have your apology for a clear mistake. sowwwwwwwy

Which option costs least if you intend to keep the bike?

Mine finished a couple of months ago.
It was Royal Mail.
It said at the start i would be offered the bike for a £35 fee at the end of the hire period.
It came, they took the £35t i hau. No offer, but i have my bike!

HTH

Tj, option three.. Is that to take ownership of the bike? Ie, say it’s a £1k bike, you would Pay £42 and that’s it?
That can’t be right? Not with all the folk on here moaning about it! Not that that’s not par for the course on here I accept!
Surely it’s worse than that?
Ps, ta all for the help!

Just received clarification of how this will operate at our place. Basically they’ll give you the bike at the end of the hire. This gift then becomes a taxable benefit. The benefit is worth 25% of the original price, so that is the figure you will pay tax on.
This is what they’ve said:

NNN aims to ensure that your savings are maximised through the scheme. At the end of your Hire Term NNN may offer the option to take ownership of the equipment. If NNN transfers ownership to you at no cost you would be receiving a benefit in kind, which is taxable. If you recieve a benefit in kind (i.e. a bike) the payment of tax for that benefit can be done through payroll as a single payment to still ensure savings are maximised. By applying the amount through payroll you will only pay tax on the market value as calculated from the HMRC guidance, rather than the market value itself. HMRC guidance enables your employer to calculate the value of your selection at the end of the Hire term. The guidance states a selection valued under £500 will be worth 18% after 12 months, where as a selection over £500 will be worth 25% of its original value. For example: – If you select £650, the market value would be calculated as £162.50 (25% of £650). The £162.50 is the reported on your payslip as income which will allow you to pay just the tax on that value. Based on a basic rate tax payer (20% Tax) the cost to you would total £32.50.

It’s not that bad. For a £1000 bike like I had, I paid 5% plus VAT before the changes. A bit over £50.

Now, if I take a bike, as a benefit in kind, I get taxes on 25% of the VAT. The rate of tax I pay is about 20%. So, the taxable value is £250 and I have 20% of that, which is about £50.

However, given the choice, I’d just keep using the bike on a rolling lease until it’s worth nothing or I leave the company.

At leats, that’s how I understand it.

You are aware that all payments made from Jan 1 2011 are subject to vat in addition to the final payment changes? Apols if mis read thread still waking up from night shift but check cyclesheme web site, if you got vat off the bike initially euro court has ruled you need to pay vat. Recent thread on this.

Cycle to work scheme, changes?

it used to be an interest free way of buying a bike, with a bit knocked off the price.

now it’s an interest free of buying a bike, for about the same as rrp.

However, given the choice, I’d just keep using the bike on a rolling lease until it’s worth nothing or I leave the company.

Employer has opted for Cyclescheme to do everything so this is the deal I’ve taken with them.

Only concern is if the “rules” get changed again. As the bike is still Cyclescheme’s for another 4(?) years it *seems* to put me a bit at their mercy.

Personally I would have preferred to take a BIK and pay the tax.