I've been asked again to consider running a C2W scheme for my guys (9 on the books).
I think only 2 or 3 would be interested in it, so does anyone have any practical dealings with Evans or Halfords as they're just down the road from me, alternatively does anyone run the scheme in-house?
It looks like letting an outside company run it would take the headache and time from me doing it, BUT, I may be tempted to take advantage of a new shiny thing, so if I were to run it, it may give me more freedom for calculating employee costs and deciding how to deal with things once the term has ended 😉
So... has anyone gone down that road and can offer any advice?
Talk with your local LBS, they should be able to 'manage' it for you.
I run it in-house. Just give them a limit below £1k and then process it and claim the VAT, divide the net by 12 and deduct from their gross amounts.
You may want a small contract letter about them leaving before the term is up etc etc but generally it is straight forward
Thanks timbo, I know you aren't meant to hint at them purchasing the bike at the end (it becomes a hire purchase agreement then) so do you have a plan for when the term ends?
Selling it to them for a very nominal amount as they've already paid the net value anyway?
[quote=monkeyfiend ]Thanks timbo, I know you aren't meant to hint at them purchasing the bike at the end (it becomes a hire purchase agreement then) so do you have a plan for when the term ends?
Selling it to them for a very nominal amount as they've already paid the net value anyway?
The tax man wants the tax on the residual value (and they did issue guidelines about that - syaing that a £1000 bike is worth about £500 after a year, not £50 for instance - can;t remember exact figures). How much you actually charge for the bike is up to you, you can charge a tenner or even give it away if you want, as long as the taxman gets the right amount
If you are claiming the input VAT you should account for the output VAT on the salary sacrifice and pay amounts over:
https://www.cyclescheme.co.uk/employers/employer-updates/cyclescheme-hmrc-vat-update-faqs#faq10
For HMRC's valuations, see here:
https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim21667a
If you're seriously thinking about setting up and administering the scheme yourself, this might be useful reading:
I used to run it in house at my old place. As above, you need to defer the final transfer for as long as possible so that the final fee is as low as possible.
Although worth noting that the rental fees can be for less than the value of the bike. On most schemes, the company actually makes money as it saves money on employer's NI contributions. There's no reason you can't pass on that saving to employees. Running it in house means that you're not tied to a particular supplier, and there's no middleman taking 10% so you get access to the best deals.
Thata what I'm after pdw,
I understand a lot of the detail to it and the calculations for working out residual value and the tax side of things but I can't find guides of what the monthly lease should be?
If the bike costs £500 + VAT then I could lease it for £20 a month for 12 months and then sell it for its guideline resale price (guessing it's around 50% original price and of course + VAT) that would get the company back its costs.
However, could I lease it for £1 a month for 12 months and sell it in the same way at the end of the term or even just retain ownership and let the employee use it for X amount of years?
There's not a lot of info for going off of the recommended course.
extending the period gets rid of the "buying the bike" issue, I would suggest usual terms for a year then £1 a month for the next 24 months
...or even just retain ownership and let the employee use it for X amount of years...
"My" cyclocross bike was provided by my employer back in 2009. At end of term, was offered options of fair market value final payment, give it back or keep using it. I've kept using it, though it's still a company asset and my employer could ask for it back at any time. I don't suppose they will. TBH, I expect they've probably forgotten that they own it. Under the HMRC valuations, it should have depreciated to zero/negligible by now, so on the one hand it would be nice to take ownership. On the other hand, I'm not sure I want to bring it up with our team of HR "professionals"