We've just had the following circulated at work. Anyone in a similar position or heard any more?

>> New HMRC guidance on the 'transfer fee' for cycle to work schemes
>> recommends a 'market value' of between 18% and 25% (25% for bikes
>> over £500) after 1 year of the scheme for calculating a transfer
>> value. Cyclescheme have been operating at a 5% market value at the
>> end of the lease term.
>>
>> These new rules also stipulate where a 'nominal' 5% or 10% has been
>> 'charged' then there is a taxable benefit to the employee for the
>> difference. Fairly sure this will apply to those who have completed
>> the scheme also.
>>
>> When adding back a 25% 'transfer fee' into the total cost of a bike,
>> you are actually only saving approximately £50 on a £1000 bike.
>>
>> Can you send this link out via the Cycle to Work groups. Very
>> worrying……….
>>
>> The values will be picked up by cycle scheme as some point.
>>
>> http://www.hmrc.gov.uk/manuals/eimanual/eim21667a.htm
>>
>> I have a gut feeling this spells the death of the Scheme.

There is no fixed time period for which cycles and cyclists’ safety equipment must be loaned under a Cycle to Work scheme. Similarly, there is no fixed time period for which a salary sacrifice scheme must run where one is used to offset the cost of loaning the cycle and cyclists’ safety equipment.

Why not go for 2 years then? A bike should be expected to last that long so the contribution could be less. A year isn't mandatory – that's your company making that limit.

I am concerned about the erosion of this scheme – so we have to try every way to make it work regardless.

http://www.singletrackworld.com/forum/topic/c2w-scheme-new-market-valuation-guidelines-published

I very much doubt the introduction of the 25% buy back will be applied retrospectively or for people already in an agreement surely – That's changing the contract the person and company have already signed?

I very much doubt the introduction of the 25% buy back will be applied retrospectively or for people already in an agreement surely – That's changing the contract the person and company have already signed?

You;d like to think so, but the contract you signed had no mention of thew final value – had it done so, it would have been a hire purchase scheme and thus not eligible for tax relief

anyway, according to druidh on the other thread, your company don't *have* to charge you that much, you just have to pay the tax on that much even if you are charged less. Can't see many companies failing to make a bit of extra cash in current financial times though, even if it's going to piss off employees

So if I did CWS 5 years ago and my employer didn't charge me for the bike what would I have to pay in tax now?

I guess 5 years down the line FMV is pretty low – so they could just charge me £5 and I would pay tax on that £5 if HMRC got involved? I can't see HMRC bothering with this? 😯

Shurly you could just say fine have the bike back and I will start with a new bike.

That would really screw them up.

I_Ache – Member

Shurly you could just say fine have the bike back and I will start with a new bike.

Cyclescheme (our provider and that of many, I suspect) will charge you if you do that

There's no obligation to buy the bike off your employer at the end of the lease. The employer can keep it/sell it but it's nothing to do with cyclescheme by then.

Charge you? Why? You have effectively hired the bike? Not sure they could as it is in the terms that you can surrender it at the end. Just finished paying for mine but in view of the new figures I am not going to bother this year now

Can someone post a link to this – can't seem to find it on the HMRC site.

There's a link in the other thread (which is linked to up there ^^^^ )

My work are looking at this new guidance and are going to update their policy soon. The amount you are charged could be £250 on a £1000 bike BUT they could decide to charge £0 and let you pay tax on that notional £250 as it is a taxable benefit. It would only be £50 tax then for most people.
Bit of a waiting game for me at the moment.

It's a bit crap that they issued guidance that stated the FMV could not be stated at the beginning of the agreement you enter into, but this effectively states the FMV anyway.
Morons.

allthepies – cheers.

My works scheme runs over 3 years, you pay for the bike over 1 year but don't get the option to buy it until 3 years has passed (if the bikes value has dropped to 25% after 1 year it should be next to nothing after 3 years).

My works scheme runs over 3 years, you pay for the bike over 1 year but don't get the option to buy it until 3 years has passed (if the bikes value has dropped to 25% after 1 year it should be next to nothing after 3 years).

According to the taxman it's 12% (over £500 orig value), and the Taxman knows best….. 😉

how does this work when the employee hasn't had 25% off the cost in the first place?

Here, they're not claiming the vat back (tossers) so we only get the tax off the cost. so for a lower rate tax payer thats 22%. Add in a 25% cost at the end of the hire and they've ended up costing £1030 for a £1000 bike (by my reconing?)

H

5lab – Member
how does this work when the employee hasn't had 25% off the cost in the first place?

Here, they're not claiming the vat back (tossers) so we only get the tax off the cost. so for a lower rate tax payer thats 22%. Add in a 25% cost at the end of the hire and they've ended up costing £1030 for a £1000 bike (by my reconing?)

Easy – you don't pay 25% at the end, you pay the tax on 25% as that's the equivalent value which your employer would be giving you if it was transferred to you for nowt. So, that'll be 20% of 25% – i.e. 5%. ON a £1,000 bike, that would be £50 – about the same as it is at the moment.