rbrstr

Because the agreement states fair market price at the end of the loan period.

1: most info on the web suggests 5% fvf, last years scheme used a 5% fvf,(well,mine did) surely this sets a legal precedent?
2: how can HMRC change significantly an agreement you are legally locked into?

bit unfair to apply this retrospectivly

1. Most info on the web says 5% but qualifies this term be saying fair market value (is your bike worth 5% after one year?)
2. HMRC are not changing anything, they gave out a clarification so employers and employees were not putting themselves in a position of tax evasion, the agreement you are legally locked into mentions nothing about the final term, it would have only mentioned you would be given the option buying the bike (at fair market value), returning it, or possibly keeping it for another 12-18 months etc. Nowhere would/should it have said 5%.

If you have paid 5% before then lucky you, tho if you ever get investigated for tax evasion this might come back to haunt you, now there is guidance you will be aware you probably didnt pay enough tax at the end of your previous contract and should be contacting the tax office to pay then the difference :0)

So, the 25% need only apply to the bike and bell. Clothes/helmet worn for a year of commuting are going to be pretty close to negligible value, I would think.

Yes, you can. The list of rates that HMRC provide are actually a list of values at which they will not question the valuation. You can go lower, by HMRC may ask for evidence of why a lower valuation is appropriate.

Problem is, it’s down to the scheme operators to offer to sell you the bike – you have no right to buy it. So in the case of Cyclescheme, it’s likely to be too much hassle for them to make you any offer that is less than the HMRC guideline. If you do it directly with your employer, and you really believe it’s worth less than the guideline amount, you may be able to suggest a lower price.

my agreement says nothing about an FMV, nor did last years.fact.i’ve dug out the paperwork and re-read it.i’d never even heard that term till reading this thread
it only mentions a transfer of ownership fee at the end of the scheme. at the end of last years scheme this was 5% or roughly equal to one more monthly payment.

i appreciate my bike is worth more than 5% after a year, and some people may regard this as unfair, but i didnt invent the scheme i just took up what was offered. and dont forget i have actually paid the full purchase price of the bike!

The FMV thing is imposed by tax rules: Your employer can’t generally give you stuff without it being taxed as a benefit. Selling at less than a fair market value is effectively providing you a benefit.

If Cyclescheme were to sell at less than FMV, you’d be liable for income tax on the difference. In this respect, the HMRC guidelines are actually quite generous: they say that your employer can sell a 1 year old bike to you at 25% of its original cost and they won’t ask any questions.

If you read the agreement carefully, you should find that buying the bike at the end of it isn’t even an automatic entitlement. Any mention of price will be a description of what is typical, in the event that they let you buy it. What is typical has changed, because HMRC have made it clear that selling at less than FMV is a taxable benefit.

So is my bike going to cost me alot more than I thought? I was told 5% by cycle scheme so I figures at the end of my loan period I’d pay an extra £50. My cyclescheme is over 1 year.

Selling at less than a fair market value is effectively providing you a benefit.

Nail on the head.

Maybe we ought to start applying some of these valuations to the classifieds – anyone got a one-year old Mojo Ibis that they want to sell to me for £200? 🙂

3 years time ths scheme will be forgotten in the mists of time, and they’ll be more people driving to work again. You get nowt for free in this day and age

Can someone clarify why the scheme own the bike and not my employer? My employer bought a voucher from the scheme for the full value?

M6TTF – Member
Can someone clarify why the scheme own the bike and not my employer? My employer bought a voucher from the scheme for the full value?
POSTED 22 MINUTES AGO # REPORT-POST

I suspect Cyclescheme have offered this service to the companies that use their service. I knew nothing about it until I received the email. I wouldn’t be surprised though that this is an option our HR took up rather than something that will happen to everyone who has used Cyclescheme.

On waiting list for next year at work as we only do about 50 a year , don’t think I’ll bother now

Having the bike as a “benefit in kind” and paying the Tax/NI on the amount derived from the HMRC table seems to be an option that everyone is ignoring. eg pay £250 or just the Tax on £250, I know which option I’d take 🙄

Having the bike as a “benefit in kind” and paying the Tax/NI on the amount derived from the HMRC table seems to be an option that everyone is ignoring. eg pay £250 or just the Tax on £250, I know which option I’d take

yes this is the best option for the employee… extra admin for employer though very little. still awaiting a view on all this form my employer will effect about 800 people.. current terms say transfer of ownership at FMV (min 10% of voucher) or 10% of voucher to return bike to company

What are the rules regarding accessories purchased then?

Am I right with what I said above about cycling shorts/helmets etc… aslo having a 25% FV imposed as that seems wrong.

IIRC, the FMV only relates to the bike.

gutted that a middle class tax loophole has been closed.
I think I can safely assume no one on here would be cycling without this scheme and you mainly uue the bike for commuting purposes as the scheme intended.
Perhaps the fact people were abusing it dealt the death blow?

The answer is just a few posts above, but here it is again:

Whether Cyclescheme do this in the offer they make you is another matter.

Evans has a handy article on its website explaining the changes

jeez theres some sour grapes on here by the folks who weren’t eligable 😛

Some people need to chill out. Its not Tax evasion as there wasn’t clear clarification so it *was* Tax avoidance, which is legal. Obviously this has been clarified now.

‘Middle class benifet’ – don’t make me laugh. Anyone can start a ltd company and do it, anyone working for a ltd company can ask to do it. My company ignored me but I’m not going to be spiteful about those who have managed to get a cheap bike, good for them.

The main purpose of the scheme was to get more people cycling to work which is a good thing for everyone. The scheme is limited to 1K so whats the issue?

Surely work own my bike, they paid for it. The tax has already been paid at purchase? So isn’t it up to work to decide what they want to sell the bike to me for? The 25% just being a guide?

Yes, but if they sell it to you for less than it’s really worth, they’re providing you with a benefit. Which is taxable.

HMRC have said that if the amount is more than 25% of the initial value, they’ll accept that as a fair market value, even though it’s likely to be a pretty low valuation for a one year old bike.

Easy. Kick the f*** out of it and give it back. Everyone should do this.

How about being responsible, and remove all those worn out components from 12 months of commuting (maybe stash them in you spares box) and replace them with affordable aftermarket spares form tesco or your friendly low budget retailer.. Also sand off any remaining paint while you’re at it.

I look forward to seeing cyclescheme’s e-bay shop, and what proportion of it’s stock is made up of 11 month old £999 hardtails.

I’m just saying hi to my Second CTW bike – looks like I’ll be saying goodbye to the loophole. Glad I wasn’t as ambitious this year.

Oh and another perspective – would you pay 8% of a bikes value each month from your gross to hire it if you were never going to own it?

Its a bit of a pity as we’ve seen a significant fall off in interested peeps at my place of work since the clarification particularly at the casual cyclist end – the business has decided not to offer the ‘pay the owed tax on the benefit’ option and is instead going to the final payment approach which has knocked the saving down to a fairly minimal amount in most cases. I think a lot of the ‘new’ users were more willing to try it if they figured it was lower outlay for more bike and the monthly payments made them more aware of how cheap a mode of transport it really is.

Hopefully the taxmans next step will be to stop drivers getting free parking through work which is also a benefit in kind and would cut down on the number of twunts on the road while I ride in – the last time we looked at it in our place of work it caused uproar as many seemed to feel free city centre parking was a human right.

Its not the death of the scheme, its just changed.

Before the changes it was pretty much one size fits all but now its a case of having to look at the options more carefully for employers and employees in terms of both how much to spend – above or below £500, which is how HMRC split the fair market value – and also in terms of how schemes are administered.

The main options for employers:

1. Extend hire agreements
2. Run a P11d
3. Reduce the % of salary sacrifice – eg, you pay back 80% of the bike’s value in year one and then the cost of transferring ownership helps employer recover their outstanding costs without too much pain to the employee after one year or possibly longer
4. Stick to one year transfer of ownership

I’ll pay whatever work want keep my bike but certainly won’t bother doing it again, may as well just buy at 0% on a new model at friendly dealer

I’ll pay whatever work want keep my bike but certainly won’t bother doing it again, may as well just buy at 0% on a new model at friendly dealer

And you could do it over 3 years as well, couple of hundred quid down and between 10 and 20 a month, not bad really.

Easy. Kick the f*** out of it and give it back. Everyone should do this.

But your responsible for the maintenance and safety of the bike, if its bust when you give it back you can almost certainly expect a nice big bill for the repair :0)

How can you maintain an “accidental” dent in the frame/rims/forks? maybe you’d been knocked off of it.

It’s the employees responsibility to make up for any loss in value (e.g. by theft or damage), so it should be insured. Hand back a badly damaged bike to your employer/Cyclescheme and they could legitimately charge you for the cost of the damage.

HMRC » In calculating the original price of the cycle, include safety equipment fitted to the cycle (such as lights and bells) but not safety equipment which would be worn by the cyclist (such as helmets or reflective clothing). Where used regularly for commuting and/or travel between workplaces, safety equipment worn by the cyclist is likely to have a market value that is lower than the table percentages for a cycle and cycle-based safety equipment

The word ‘likely’ appears in that para. Not clear, open to interpretation, again. I’d be pissed if they decide to impose 25%…

Would have been helpful if Cyclescheme had emailed all those in the scheme with this clarification, also rather unfair to say that it will be applied to all contracts ending post August 2010. Kind of have you over a barrel don’t they.

MrSynthpop – Member

Hopefully the taxmans next step will be to stop drivers getting free parking through work which is also a benefit in kind and would cut down on the number of twunts on the road while I ride in – the last time we looked at it in our place of work it caused uproar as many seemed to feel free city centre parking was a human right.

If I had free workplace parking, I wouldn’t bank on it lasting.

Cash-strapped govt + cash cow on which they can dump the admin onto employers + possibility of calling it a “green tax”.

Reckon it will be gone by 2012 – probably tax people on value of the parking based on local commercial parking operations so anyone with a city centre space will get @rseraped but will be negligible/ nil for rural businesses.

Having the bike as a “benefit in kind” and paying the Tax/NI on the amount derived from the HMRC table seems to be an option that everyone is ignoring. eg pay £250 or just the Tax on £250, I know which option I’d take

This is exactly what happened to me last week! My final payment was actually less than 5%.

i did put it in my post but i think its been lost in all the blind panic.

insert sand and oil mix in to hubs forks ,seat tube , free hub and return to employer 😆

My mate is in this boat. He was told there would be a £50 – £75 final valuation of the bike he wanted but is now looking at £300.

He said that he feels mislead and would have to recoup the mislead amount by doing some work on the side and not declaring it to the taxman. 😀

I’m glad I didn’t pull my finger out to bother now and feel sorry for all the folk who won’t know all this year and will get a shock at the end of their hire period.

“Mugged” by the taxman yet again.

So after a quick phone call, things seem a little clearer – to me anyway. It seems that if I pay the £70, then cyclescheme will not want anything more from me in the future. I just have to keep hold of the bike for 3 years.

part of the email below 🙂

The extended hire period is 31 months. If you add the initial 12 month hire period you have already completed this will take the total time you have had the bike to 3 years 7 months. As the bike is over 3 and a half years old we can use the HMRC percentage for a bike at 4 years which is 3% or 7%.

If you wish to take ownership of the bike and equipment after the extended hire period we will retain the continuation deposit you have already paid as the Market Value payment.

Happy days again!

I work at York Uni. and the exact wording on the University paperwork when I joined the scheme in April is as follows; “During the Cycletowork Extra scheme, you are hiring a bike from the University. At the end of the 12 month hire period, you may have the opportunity of buying the bike at the fair market value at that time, judged to be around 5% of the original value.”

That’s what Evans think too:

“Q: So what happens to people already in the scheme?
A: Our advice for existing schemes, where ownership has not yet been transferred, is to extend the hire agreement for a longer term, which means the cost of ownership becomes less and eventually is zero. Use of the bike continues as normal at no extra cost. Should an employee leave or request to take ownership at any time then the appropriate fair market valuation charge is calculated using the new table. Further details on this option can be found below.”

I’ve just had a final payment for £200 plop into my inbox. As my hire agreement says nothing about final payment, only that I will “have to discuss this with my employer”, I’m a tad pissed that they transferred the ownership of the bike the CycleScheme without telling me or giving me any advance warning.

Ah well I got an awesome bike out of it that I probably wouldn’t have got round to buying. I won’t be doing it again though 🙁

Handsomedog.. it’s the companies bike, they can do with it what they like! You are only hiring it remember…

Also, as they have transfered ownership to CycleScheme, why can’t you do the pay £70 and extend the hire period thing as is suggested in geoffj’s email? Unless you had planned on selling the bike of course…

Evans’s scheme is not Cyclescheme