Well it makes you richer than someone earning minimum wage doesn't it. And certainly 'rich' enough to be able to buy a bike for leisure activities.
How do you know the financial situation of everyone on £100,000? You could have a big mortgage, an expensive divorce, other hobbies, kids and school / uni fees...
On a £100,000 salary, your take home pay will be £68,557.40 after tax and National Insurance. That's £5,713.12 per month. If you're the sole earner in a household, it doesn't necessarily leave you wallowing in enough cash to go out and buy a £6000 bike on a whim.
It is not a lack of tolerance , it is trying to reduce the massive inequality in the country and again, giving people on £100K a tax break to buy a £6k bike is not helping.
But statistically, it's not being used for that (or very rarely). A better way to reduce inequality would be to open it up to everyone, especially those on low income, the self-employed, the WFH people. And maybe cap the tax exemption at the lower rate, not the higher rate. That way everyone benefits and it's a net positive.
You could even produce a list of acceptable bikes (so e-cargo, folding bikes, general commuter type machines) to close this apparent loophole of company directors riding around on tax-free S-Works.
Well it makes you richer than someone earning minimum wage doesn't it. And certainly 'rich' enough to be able to buy a bike for leisure activities. And if you don't want to spend loads of money on a bike then buy a cheap one (my only bike cost me £500 and I ride it 4 times a week, 52 weeks a year.)
What concerns me in all this discussion of C2W and inequality is that there's no discussion, maybe not even any awareness of the impact of other sal-sac schemes. So, it seems that it's a terrible thing that someone might abuse C2W to buy a toy, but those who are in the fortunate position to increase their pension contributions to avoid income tax don't even get a mention.
The proposal means, from a selfish point of view, that I don't get a nice bike to ride to work on (and I do ride to work, a lot) but also have a crap pension to look forward to because I've never been able to play around with my pension contributions. It feels as though I'm going to be denied one of the few tax breaks allowed at my income level, but meanwhile those higher earners will barely notice any difference because they can afford the stuff anyway. And it seems as if plenty of people on here being vocal against it are also at my income level - turkeys voting for Xmas!
(Sorry kerley - not having another go at you - your quote was just close at hand for me to copy!)
But statistically, it's not being used for that (or very rarely). A better way to reduce inequality would be to open it up to everyone, especially those on low income, the self-employed, the WFH people.
Cap or no cap, the FCA rules still mean that many lower earners can't use it, same with fleet hire schemes. Changing the FCA rules does not appear to be sensible so what is the solution?
Find something for low earners, or just accept that they will never get to use the scheme, a scheme which could have a tangible impact on health inequalities?
I hope it's stopped. Let's be honest is has become a tax dodge. It never benefited those who needed it but those who didn't.
The tax relief should be the inverse of what it is now.
So the lowest paid should get the highest tax relief.
Anyone earning enough to be in the 40% of higher tax bands should not get anything.
Amazing display of chip on the shoulder classism, bravo
Crabs in a bucket comes to mind here
I don't know how you worked out Pete has a shoulder chip from that simple statement. I agree with him entirely and I'm paying a chunk of 40% tax rate. I'm just a bit of a leftie, and reading back seems like there are quite a few in agreement with him.
It never benefited those who needed it but those who didn't.
It was the carrot that helped lead a lot of people to buy their first adult bike. Some went on to be regular commuters. Others are out in the "Surrey Hills" on sunny Saturday/Sunday mornings. Others left the bike to rot, or passed it on. Some of these people were average earners, some were high earners. We need to balance this against the people who use it to buy a new bike every year. Here's an idea... keep the scheme exactly as it is, but only to be used once every five years per a NI number? To help at the lower end... how about also removing VAT from the very cheapest commuter bikes? Sub £500 say.
What concerns me in all this discussion of C2W and inequality is that there's no discussion, maybe not even any awareness of the impact of other sal-sac schemes.
I am aware of them and have stated they should all go. People who can afford to sacrifice their salary are clearly earning more than they need too while those low earners couldn't dream of sacrificing a penny of their salary. Again, it's an equality issue for me.
If you need to give people help towards buying a bike to get to work then provide it as a means tested benefit that they can apply for.
And then the government briefed that they would cut heat pump subsidies. Almost as if the Labour government has an anti green agenda. Throw in the Trans debacle and McSweeney and blue labour really is intent on rolling back progressive policies to pander to Reform voters who are never going to vote labour.
People who can afford to sacrifice their salary are clearly earning more than they need
I'm very sorry, but what the actual f?
Who, may I ask is the judge and jury of how much money anyone needs?
Let me guess, the amount is more than you currently earn.
Its like the joke about people driving on the motorway.
Anyone going 1 mph slower than you - 'Get out of the way, slowcoach, what are you playing at?'
Anyone going 1mph faster than you - 'OMG, what a maniac, what on earth are you doing?'
So, if this is announced, when would it come into effect? Would it be immediately or April?
So the lowest paid should get the highest tax relief.
They do already. If you only earn £12,570 you will get tax relief on tax you didn't pay in the first place on up to the entirety of your income minus 20%. Check HMRC's own site. Litteral free money.
Removing VAT will not reduce the cost of bikes.
Brands price their products at what they know they can sell them at, knocking 20% off will be a short term measure and then they'll quickly up their prices back up and pocket the extra profit. The general public will not benefit in any lasting way.
Most people set a budget and spend that. Having the bike you want 20% cheaper means the bike you couldnt afford is also 20% cheaper, people will just end up spending the same amount and getting something better.
The cycle to work scheme probably does need modifying but VAT reductions arent the way to do it.
Most people set a budget and spend that. Having the bike you want 20% cheaper means the bike you couldnt afford is also 20% cheaper, people will just end up spending the same amount and getting something better.
Which is almost exactly how people buy more spendy bikes on C2W. They 'could' afford £2K on a bike, but now they are saving on income tax they 'buy' a £3K bike for £2K.
Most people set a budget and spend that. Having the bike you want 20% cheaper means the bike you couldnt afford is also 20% cheaper, people will just end up spending the same amount and getting something better.
Which is almost exactly how people buy more spendy bikes on C2W. They 'could' afford £2K on a bike, but now they are saving on income tax they 'buy' a £3K bike for £2K.
Exactly, so lowering the cost, doesn't actually lower the cost.
I don't really see the number of people who cannot afford a £500 but can afford a £400 one being so significant that we can sit back and say "job well done" when we're trying to improve the scheme.
Most people set a budget and spend that. Having the bike you want 20% cheaper means the bike you couldnt afford is also 20% cheaper, people will just end up spending the same amount and getting something better.
Which is almost exactly how people buy more spendy bikes on C2W. They 'could' afford £2K on a bike, but now they are saving on income tax they 'buy' a £3K bike for £2K.
Exactly, so lowering the cost, doesn't actually lower the cost.
I don't really see the number of people who cannot afford a £500 but can afford a £400 one being so significant that we can sit back and say "job well done" when we're trying to improve the scheme.
That’s just your opinion of course. Not everyone goes for a more expensive bike just because C2W makes it cheaper. A lot of people over the years who aren’t much into cycling but have decided to get C2W (but possibly wouldn’t have bought a bike without the incentive) have just wanted suggestions for “what will do the job”. They’re not interested in bling - just want something decent / reliable. I’d imagine a lot of C2W purchases fall within this kind of category. Buying a £500 Carrera / Boardman racer or hybrid etc.
Removing VAT will not reduce the cost of bikes.
Brands price their products at what they know they can sell them at, knocking 20% off will ....
Nhgggh arithmetic fail.
I got a £1200 TV on salary sacrifice. There's no way I could have just went out and bought it. Same for the two bikes I've got via C2W.
Granted I could have saved a set amount each month, but why when these schemes are available?
That’s just your opinion of course. Not everyone goes for a more expensive bike just because C2W makes it cheaper. A lot of people over the years who aren’t much into cycling but have decided to get C2W (but possibly wouldn’t have bought a bike without the incentive) have just wanted suggestions for “what will do the job”. They’re not interested in bling - just want something decent / reliable. I’d imagine a lot of C2W purchases fall within this kind of category. Buying a £500 Carrera / Boardman racer or hybrid etc.
You can't dismiss my post by saying it's just my opinion then then say you imagine, because that makes everything you've said your opinion.
Nhgggh arithmetic fail.
Nhgggh clever dick success
If you know people will buy your helmet for £100 why on earth would you discount it? The % you used to give the tax man, now goes into your account, if you're a vaguely ethical company then your staff get a bonus, if you're not then you're already maximising profits.
Removing VAT will not reduce the cost of bikes.
In my example of VAT free below £500, brands absolutely would try and hit the £499 price point with bikes that would otherwise have been priced at for example £599. It wouldn't affect prices further up the range though.
Isn’t sacrificing your salary another way of saying ‘Buying stuff’? Could be bikes, could be food, clothes and shelter?
No it isn't, otherwise I could get food and housing costs removed from my gross salary couldn't I.
Maybe they should tweak it so if you're a high and mighty leftie who feels ashamed for being in the 40% tax bracket you can use your salary sacrifice C2W pot as a sponsorship for someone who otherwise wouldn't be able to afford a bike even on C2W, as a minimum wage or lower threshold tax payer. Entirely at the individuals discretion and as an opt-in scheme, I think a lot of people in this thread would really benefit morally speaking from the ability to do that for those "less fortunate", and it means those in this thread who think people on 40% tax rates who don't deserve anything less than a kick in the shins, also get a nice little kickback.
Then those who grafted their arse off to fight their way out of the council estate they grew up on and spent decades making sacrifices and going without to get to a higher rate salary can continue getting their expensive "surrey hills" ebikes through the scheme and everyones happy! 😀
Isn’t sacrificing your salary another way of saying ‘Buying stuff’? Could be bikes, could be food, clothes and shelter?
No it isn't, otherwise I could get food and housing costs removed from my gross salary couldn't I.
there were people trying to do that but I think HMRC stamped it out long ago
https://payadvice.uk/2025/02/12/salary-sacrifice-grocery-schemes-do-they-work/
People who can afford to sacrifice their salary are clearly earning more than they need too
Isn’t sacrificing your salary another way of saying ‘Buying stuff’? Could be bikes, could be food, clothes and shelter?
There is a bit of a push these days to offer staff salary sacrifice as a perk. It's benefit really depends on your circumstances. Some things like EVs, Bikes etc are incentivised by the Gov (via tax savings) to encourage people to do beneficial things.
Other things like consumer goods are not, you can't just buy a £1200 TV and not pay tax on it, it's more of a 0% finance deal really and buyers should consider if the things they're buying are good value or not. A £1200 TV for a few quid a month out of your wages is tempting, but if it's a TV that would cost you £900 in the shop, it's not. Some of these schemes are income generating for employers and the cos that run them on their behalf.
Years ago when the rules were different, you could do things like buy private healthcare, gym memberships etc which were tax free, but they no longer are.
This thread has gone all wrong. It maybe give an insight into why everything is going wrong in the UK.
There is a bit of a push these days to offer staff salary sacrifice as a perk.
Yep, ours allows you to buy pretty much anything. Air fryers, TVs, wood burners... It's not tax free, it's just an easy version of "interest free credit" with the proviso that everything on there costs about 10% more than the high street retail price.
But the C2W and car lease / purchase schemes are both tax free.
I think with a lot of people who are against the cycle to work program more because they perceive it benefits people who are not them....
I've read through the whole thread, and have seen more higher rate payers saying they don't use it because they think it's regressive or admit to abusing the privilege and feeling somewhat guilty about it.
I'm against the Cycle To Work current scheme precisely because it overwhelmingly seems to benefit people me and people like me! I just don't feel like my need for an expensive e-bike (which ftr I do ride to work and use to replace a car) outweighs other people's needs for...idk...aged care or child abuse social workers or even a pension.
I wonder if you could buy a swift ride on the cycle to work scheme, if you.mainly work from home ?
That’s just your opinion of course. Not everyone goes for a more expensive bike just because C2W makes it cheaper. A lot of people over the years who aren’t much into cycling but have decided to get C2W (but possibly wouldn’t have bought a bike without the incentive) have just wanted suggestions for “what will do the job”. They’re not interested in bling - just want something decent / reliable. I’d imagine a lot of C2W purchases fall within this kind of category. Buying a £500 Carrera / Boardman racer or hybrid etc.
You can't dismiss my post by saying it's just my opinion then then say you imagine, because that makes everything you've said your opinion.
Yes but the only data produced so far on this thread shows a large % of bike purchase prices were near the bottom end of the scheme. If this data is representative of the wider scheme then it proves my point.
My experience that I referenced is from work where people tend to know I’m into bikes and have asked my advice on what bike I’d suggest for cycling to work on.
Just this morning I was speaking to a colleague who moved from an 800 quid decathlon e bike to a 2600 quid trek e marlin for his commute to work...... Because he was able to get it on the cycle to work for 102 quid/month net rather than 800 quid next month
He has no clue about bikes. He just sees it as perceived bargain and a way to reduce his tax
Rather than making bikes VAT-free under a certain price which likely wouldn't make any difference to the selling price a VAT rebate on bike purchases under a certain amount for those on NMW would be better but would probably cost more to implement than is practical.
In case it's useful when framing your arguments to be mean to each other or wring your hands:
An earner on £43K pays £6K in tax & NI per year. Buying a £4K bike on C2W reduces their tax by £1.1K.
An earner on £125K pays £45,500 in tax & NI. The £4K bike costs reduces the tax paid by £2K.
All figures probably correct for Scotland, if ChatGPT can add up properly yet. Looks about right anyway.
C2W seems like a good, mostly harmless thing that probably keeps a lot of bike shops in business. That £900 extra savings for the high income guy doesn't have great optics, but they are still paying a good whack more of tax as a ratio of earnings. And salary sacrifice schemes seem mostly designed to smooth out the impact of the higher tax brackets, reduction in personal allowance etc and maybe grease the wheels of the economy a bit.
Anyway Jim Ratcliffe earns millions a year, keeps firing UK workers, and pays eff all in tax. He probably doesn't even like bikes. Have a go at him instead.
In case it's useful when framing your arguments to be mean to each other or wring your hands:
An earner on £43K pays £6K in tax & NI per year. Buying a £4K bike on C2W reduces their tax by £1.1K.
An earner on £125K pays £45,500 in tax & NI. The £4K bike costs reduces the tax paid by £2K.
All figures probably correct for Scotland, if ChatGPT can add up properly yet. Looks about right anyway.
C2W seems like a good, mostly harmless thing that probably keeps a lot of bike shops in business. That £900 extra savings for the high income guy doesn't have great optics, but they are still paying a good whack more of tax as a ratio of earnings. And salary sacrifice schemes seem mostly designed to smooth out the impact of the higher tax brackets, reduction in personal allowance etc and maybe grease the wheels of the economy a bit.
Anyway Jim Ratcliffe earns millions a year, keeps firing UK workers, and pays eff all in tax. He probably doesn't even like bikes. Have a go at him instead.
I agree. Of all the tax issues, scams, loopholes, dodges, etc I don’t think that cycle to work is the one to single out and argue over. Ask to scrap it if you like because it’s not perfect and higher earners benefit more…. Then it will be gone and who will be better off… none of us really.
It would be good to improve it or do more to promote cycling or help people on lower incomes to buy a bike or do more to help the bike industry… but I doubt any of that is on the table. Limiting or scrapping the scheme is a sign of the government’s desperation to so something and to be seen to do something… anything. Anything other than tax those who should really be taxed.
The Telegraph, notoriously anti-cycling when it suits, ran an article a few years ago about how terrible this scheme was, the poor taxpayer funding luxury bikes and kit for Lycra Man.
Now they're telling everyone to take advantage of it quick before the Government stamps out this highly beneficial savings opportunity.
Cycle to work scheme: How to get a £3,000 e-bike before Reeves takes it away https://share.google/38b4w4O5fQYla7JJG
There is a bit of a push these days to offer staff salary sacrifice as a perk.
But the C2W and car lease / purchase schemes are both tax free.
The car scheme certainly isn't. The tax you save is replaced by benefit in kind tax. The less polluting your vehicle, the less you pay but you do still pay, even for EV's.
The most recent comments are interesting, lots of delving off into the tax savings (necessarily a good thing?) mostly for those on higher incomes.
It all perhaps loses track of the original point, the scheme still isn’t helping those on the lowest incomes currently, who arguably need access to affordable transport options more(?) to literally cycle to work.
As for higher incomes Tax avoidance (that’s what it is), yeah sure grizzle and grumble and point at the billionaires. You’re right, everyone should be paying appropriate taxes, it’s not a binary choice the government could/should tighten the rules for everyone. and all the IT managers end up buying the bike they were going to anyway (and can afford) just with SLX rather than XT, their suffering is perhaps not the greatest.
As for the continued hyperbolic labelling of any posts questioning the current status quo as “anti-C2W”? Calm the flip down, there’s just (more socially minded?) people who recognise the need for reform (not abolition) of a quarter century long scheme, that’s become a middle-class tax wheeze, and people who are just fine with some marginal inequality (for whatever reason) that want to shout them down and talk about tax savings. We all know the old adage about loss of privilege.
An earner on £125K pays £45,500 in tax & NI. The £4K bike costs reduces the tax paid by £2K.
All figures probably correct for Scotland, if ChatGPT can add up properly yet. Looks about right anyway.
As somebody else pointed out (in an unrelated thread) this doesn't look correct for Scotland.
Why you would use ChatGPT for this when there is a .gov income tax calculator is beyond me. Chatbots aren't a time saver if it spouts bollocks that needs verifying.
Frankly I think salary sacrifice schemes for "perks" should only give tax rebates at the basic 22% level.
Speaking as a higher earner, there's no earthly justification for me getting 40% off a new bike while one of my more junior colleagues can only get 22% off the same bike.
As for electric car schemes - they looks so expensive compared to just leasing a car that the companies providing them must be making an absolute fortune. For example a Polestar 2 would cost me £900 gross on our scheme.
Meh, more importantly where’s the worked example for a single, working Mum on ~£22k, riding the bus everyday after walking her imaginary child to school? That imaginary persons entire annual NI contribution is probably less than Mr 125’s C2W savings, but the benefits of C2W would arguably be more significant for them…
As for electric car schemes - they looks so expensive compared to just leasing a car that the companies providing them must be making an absolute fortune.
So ours (and I reckon many of them) operate on the premise of a simple monthly payment covering everything - insurance, tax, servicing, mileage, wear and tear...
It's bollocks because they're not looking at any individual circumstances so the "insurance" is going to be way higher than anything I could get via confused.com. The servicing is going to assume 4 new tyres a year plus a basic £1000 or so, again, way more expensive than my excellent local garage would do.
What I want is a car, nothing else. Then for me to sort all the rest of it. But no, the insurance and sundries is where they make all their money. It would actually work out far more economical for me to get some sort of Approved Used vehicle from a dealership and pay the monthly lease / PIP then sort the insurance, MOT etc myself even when you take into account the salary sacrifice element.
An earner on £125K pays £45,500 in tax & NI. The £4K bike costs reduces the tax paid by £2K.
All figures probably correct for Scotland, if ChatGPT can add up properly yet. Looks about right anyway.
As somebody else pointed out (in an unrelated thread) this doesn't look correct for Scotland.
Why you would use ChatGPT for this when there is a .gov income tax calculator is beyond me. Chatbots aren't a time saver if it spouts bollocks that needs verifying.
Chat GPT can't add up. A taxpayer in Scotland earning £125k pays £52146 tax and NI. Even though I don't use it I have no problem with someone paying 2/5ths of their income in tax getting a cheap bike.
Another question might be do we draw a line on tax relief somewhere. If the £125k earner also pays X amount into a pension and uses any other legal means to reduce tax do we have an annual tax relief limit?
Actually making cycletowork a flat 22% seems fair. If the purpose is to increase cycling to work why should a high earner who needs the scheme less get more encouragement.
But statistically, it's not being used for that (or very rarely).
Did we get that confirmed? IIRC We had a two year old survey shared, where less than 500 previous scheme users gave the ballpark figures for their C2W values from 2017-23, but surely there’s a more complete and accurate dataset? (Not that I can be arsed looking for it).
Anyway that survey made me question some assumptions, but still doesn’t change the existing inequities of the scheme…
Obviously anecdote being another term for data 😉 I certainly know more people in the higher income brackets that evangelise about those yummy C2W savings than I do lower income earners, but that’s probably more to do with my limited social circle.
That's annoying, I was thinking about getting a new frame on C2W when mine renews next year! I'm not a higher rate taxpayer and ours is capped at £1500 so the savings aren't massive for me, but it's a nice easy way to finance a new bike and save a bit as well.
We're abolishing something which was recently reported to be a net saving. Setting aside the political optics it seems perverse.
The cynic in me says the abolition of c2w and the terrible state of funding for active travel is actually about Westminster trying to bend us all over for the "motoring industry" as usual.
Meanwhile, fuel for executive jets is still tax-exempt despite the incredible harms of elite air transportation.
Speaking as a higher earner, there's no earthly justification for me getting 40% off a new bike while one of my more junior colleagues can only get 22% off the same bike.
Is it not just a small benefit to paying vastly more in tax?
Is there really any justification to a person earning £45k a year having ~£9k in deductions, whereas the person earning £125k having ~£47k in deductions?
Would it not be fairer if we had a flat income tax rate?
Odd thing is, I haven’t heard anything about salary sacrifice for the drive my Taycan to Work scheme. The subsidy of electric cars on schemes that include my own (£900 pcm for a Taycan, apparently) must dwarf bikes.
Is there really any justification to a person earning £45k a year having ~£9k in deductions, whereas the person earning £125k having ~£47k in deductions?
Yes
Would it not be fairer if we had a flat income tax rate?
No
Bad news for the high street LBS if C2W revenue drops
I'll stick my head above the parapet
The limit on our scheme was increased from 3.5K last year to 20K this year with a 10% subsidy from the company. Apparently the justification for the limit increase was 3.5k wasn't enough for those fancy electric cargo bike for taking the kids to school in. The HQ is in Cambridge and that is probably true to some extent.
My boss drives an electric Taycan getting a 42% tax saving on it.
I've used the C2W scheme since inception. Our first scheme had the 1K limit and a bike every three year at some point switched to every year
I think I've had
These were over about first 16 years all on the 1K scheme mostly around that limit in those early years I was still paying basic rate tax.
Kona Caldera.
Carrea flar barred road bike
Boardman road bike
Boardman Fulll suss
Voodoo Limba, the Scandium frame one
GT grade
Boardman hardtail
Boardman hardtall - for a child
Dolan Gravel frame
Since it went to 3.5K
I've bought 4 Ti bikes and enduro bike (for my son which he doesn't use so I use it) at that limit, I'm building my collection so I don't have to buy any bikes when I retire and for the next few years I'll buy components to keep them going so cutting the limit doesn't bother me as I'm done with big spending.
I do ride to work everyday but on an On-one Pickenflick not bought through C2W.
The C2W saves me about 2% off my annual tax bill, I'm not exactly Jimmy Carr.
The car scheme certainly isn't. The tax you save is replaced by benefit in kind tax. The less polluting your vehicle, the less you pay but you do still pay, even for EV's.
.
ours (and I reckon many of them) operate on the premise of a simple monthly payment covering everything - insurance, tax, servicing, mileage, wear and tear...
It's bollocks because they're not looking at any individual circumstances so the "insurance" is going to be way higher than anything I could get via confused.com. The servicing is going to assume 4 new tyres a year plus a basic £1000 or so, again, way more expensive than my excellent local garage would do.
What I want is a car, nothing else. Then for me to sort all the rest of it. But no, the insurance and sundries is where they make all their money. It would actually work out far more economical for me to get some sort of Approved Used vehicle from a dealership and pay the monthly lease / PIP then sort the insurance, MOT etc myself even when you take into account the salary sacrifice element.
The BIK tax paid is far outweighed by the savings on tax, NI and pension contributions. On my work scheme I could get a Renault 5 for £120 per month including insurance, tyres and servicing (and BIK).
Someone earning ~£65k in the NHS could be making savings of 12.5% on pension contributions, 40% on income tax and 2% on national insurance, so a £600 per month lease deal 'costs' less than £270. £40 BIK tax still means nearly £300 of tax avoided via salary sacrifice every month.
savings of 12.5% on pension contributions
This is going very OT...users of said schemes need to remember that regardless of if you are on a defined benefit (unless final salary linked instead of average when it won't unless you are in your last few counting years when using it would have a very big impact) or defined contribution pension, that 12.5% saving on your pension contribution will have an impact at retirement.
Someone earning ~£65k in the NHS could be making savings of 12.5% on pension contributions, 40% on income tax and 2% on national insurance, so a £600 per month lease deal 'costs' less than £270. £40 BIK tax still means nearly £300 of tax avoided via salary sacrifice every month.
Can you explain the 12.5% bit... At first glance I thought you meant that they aren't paying that 12.5% into their pension. Is someone else? If not then surely it isn't a saving.
On my work scheme I could get a Renault 5 for £120 per month including insurance, tyres and servicing (and BIK).
My work scheme gets nowhere near that. A Renault 5 would be a £500 gross reduction on ours. The pricing seems to bring the monthly cost after tax suspiciously in line with any other lease deals.
Can you explain the 12.5% bit... At first glance I thought you meant that they aren't paying that 12.5% into their pension. Is someone else? If not then surely it isn't a saving.
It reduces the cost of the car, but it does that because you're paying less into your pension. E.g. if on £1000 of gross salary you'd have paid £125 into your pension then if you spend that £1000 on a lease car as a salary sacrifice) then it's only cost you £875 (the same as the tax and NI benefits of salary sacrifice).
Except you've paid less into your pension which means it will pay out less so you shouldn't really treat the 12.5% as a true saving (which I think is what you're getting at), but that's how the schemes present it. I imagine because it would be really hard to calculate the cost to you in retirement of having a lease car when you're 30, but it's easy to show the saving right now on the car.
. A Renault 5 would be a £500 gross reduction
What do you mean by gross reduction? What's the impact on take home pay?
shouldn't really treat the 12.5% as a true saving (which I think is what you're getting at), but that's how the schemes present it.
That's shocking. How do they get away with misrepresenting it like that?
( Rhetorical question. I know the answer .. they are big business and we are just consumers. They can shaft us any way they want.
. A Renault 5 would be a £500 gross reduction
What do you mean by gross reduction? What's the impact on take home pay?
I'm surprised you need to ask that given you've just been explaining gross reductions, but assuming a 40% tax rate a £500 gross reduction will end up being roughly £300 in take home pay. A rip off in other words, certainly not a 40% perk.
There's an article on Cycling Weekly about the impending cap and its potentially 'devastating' effect on the cycling industry. One shop owner stating that they don't stock bikes below £2000, so if the cap is set at £2000 or below they won't benefit at all from the scheme.
If a bike were to exceed any imposed cap, would it simply unavailable on the scheme or could it be purchased with tax relief up to the level of the cap?
I also remember concerns early on when the scheme first came about, that technically the employer actually owns your bike (with you leasing it from them) up until the point that full payment is made. There were some concerns as to what might happen should the company go bust an/or seek to liquidate assets. Is this still the case or have I got this wrong?
Yes, bikes on cycle to work are owned by the company until the taxable value is zero. This is four years on cycle scheme, I assume to align with HMRC guidance, so I suspect this is typical for correctly administered schemes.
This is why you generally can’t “top up” cycle to work schemes as it would blur the lines of who would own it. For this to change with a scheme with a reduced cap the way the scheme was structured would have to be fundamentally changed.
I also don’t have a huge amount of sympathy for business that say they will struggle if a sensible cap is put on the scheme. The fraction of >£2k bikes actually used for communing has got to be fairly small. The vast majority are just tax evasion and the sellers know it.
I felt very uncomfortable at ard rock seeing stalls with enduro and downhill bikes with tags advertising they could be bought on cycle to work schemes. They know they will never be used for commuting, so know anyone using that route is cheating the rest of the population.
They know they will never be used for commuting, so know anyone using that route is cheating the rest of the population.
Certainly it breaks the rules, but how is the population being cheated? Any theoretical reduction in tax raised has to be set against reduced sales and wider benefits such as health. As I said earlier it's a complete irrelevance when you consider that £50k EVs can be bought on salary sacrifice without any need to drive them to work.
What's clear from this thread is that the government is mostly concerned about optics, and we're falling for it.
One shop owner stating that they don't stock bikes below £2000, so if the cap is set at £2000 or below they won't benefit at all from the scheme.
Seems to me that there's a simple way of fixing that.
TBH at the £1,000 cap there was already very little dealer margin. The scheme administrator creamed off 10 or 15% of the sale price (usually RRP for that reason). Stocking, build, PDI and (usually) a first service cut into the rest. Money might be made by selling clothes, accessories and so on outside the scheme. If you were selling enough bikes, it might put you into a higher discount band from the distributor, which might give you some additional margin on non-scheme bikes too.
The fraction of >£2k bikes actually used for communing has got to be fairly small
Let me guess, you don’t commute by bike, so haven’t noticed that many people use a nice bike to commute on? I have friends and family members that live in flats in cities, only have one bike for all uses due to space, so commute on the same bike they ride at the weekend. Check the price of a 105 equipped carbon road bike from one of the big brands the general public know, such as Trek (a typical sensibly equipped reasonably light weight machine from a non-niche brand).
The second bike for commuting thing isn’t for everyone. For many reasons. And also… where has this idea come from that you have to commute on the cheapest possible bike if you want a tax break, with no such limitation being suggested for cars?
And then there’s the (I’m repeating the point again for effect) dedicated commuter/city/cargo e-bikes. Excluding them based on cost from the scheme while keeping tax breaks for far more expensive and damaging electric cars would be ridiculous.
I'm a basic rate taxpayer and I'm looking at getting an EV on the salary sacrifice offered by my employer. The car, an Omodo E5 Noble is £355 PCM after tax relief and includes insurance, servicing, tyres, breakdown and redundancy/resignation cover. The best price I've found for the same car on the same deal works out at £393 with insurance, but not any of the other things offered on the salary sac scheme, and amortising the 12 month downpayment to 36 payments for comparison purposes.
Gotta love STW, a conversation about C2W has essentially evolved (or devolved?) into a salary sacrifice lease cars, Tax and NI dodging ****fest… 🤔
Top work fellas.
In the midst of which the discussion of C2W as an item of ideological purity predictably climbed up its own absurd fundament.
reducing the total spend allowable & trying to bring it back to providing financial assistance for commuters rather than for high-end non-commuter bikes.
I see zero problem with this.
I can't play the violin, but if I could I wouldn't bother playing it.
Gotta love STW, a conversation about C2W has essentially evolved (or devolved?) into a salary sacrifice lease cars, Tax and NI dodging ****fest…
Top work fellas.
Classic "distract the plebs" this IMO.
This is why you generally can’t “top up” cycle to work schemes as it would blur the lines of who would own it.
This is true in theory, but rarely enforced IMHO. I think I've topped up four of the last five vouchers I got.
For this to change with a scheme with a reduced cap the way the scheme was structured would have to be fundamentally changed.
Or ignored
This is why you generally can’t “top up” cycle to work schemes as it would blur the lines of who would own it. For this to change with a scheme with a reduced cap the way the scheme was structured would have to be fundamentally changed.
Get me - at the end of an STW thread, I've actually changed my mind!
i did have a thing for the VAT removal from utility bikes but....I can see the argument that the prices would float up again (are helmets cheaper now 10-15 years on from VAT was removed from them - not so sure) and that doesn't help with the loan/monthly repayments part of it which will help the less well off especially.
My new proposal - change the scheme in 4 ways...
- Scrap the 'to work' element - make it any bike for any reason or components to keep an existing bikes on the road/dirt.
- Find a way (no idea how - not my bag - can't believe it can't be fudged) to allow a legitimate top up if you want to. The final value bit would need a bit of thinking about.
- The salary sacrifice/tax saving element has got a hard limit of say £1500 - roughly enough to balance for inflation from when the scheme started. Mean or smaller businesses might expect you to come up the rest of the top up up front - others might lend you the money at whatever rate they fancy. Regardless, the salary sacrifice element has got an upper limit.
- Employers of those on close to minimum wage should be encouraged to do the maths and allow as much possible to go through on salary sacrifice and the rest to be topped up on an interest free loan on otherwise similar terms.
High rate tax payers will still benefit more and that's always the bit that's pissed me off. Now though - **** it. High rate tax payers can already load their pension at more favourable rates with the same income instead and .....is this so very different? And by putting a hard limit on the salary sacrifice element the tax "personal re-purposing" on a £10K enduro ebike for a high earner won't be quite so disgusting so I think I can live with it. But £1500 should get a good commute bike, but if you must commute with Di2 Ultergra you can, it'll just be on your own dime.
The fraction of >£2k bikes actually used for communing has got to be fairly small
Let me guess, you don’t commute by bike, so haven’t noticed that many people use a nice bike to commute on?
Every day, and being a bike nerd I pay attention to the bikes in the bike shed a work. Normally a hundred or so bikes in the sheds and good security means in summer there will be the odd very nice bike. However, of the regulars there are two newish bikes that are over £2k other than mine.
I have colleagues that have decent do it all commute and leisure bikes that they bought on the scheme for much less than £2k. One even an e-bike (for less than £1k because if you aren’t already into cycling that feels like a lot for a bike) despite those being allegedly impossible to buy under the mooted £2k limit!
The “but you get it back in the vitality of the bike industry” argument doesn’t hold water. If you apply that logic to everything the government has no revenue at all. It is the kind of argument used to keep the joke that is low tax salary sacrifice cars allowed though!
£1500 won’t buy an electric Brompton. I commute on a T-line bought on C2W. I get a significant discount as a higher rate tax payer. The bike is almost solely used for commuting and is my most expensive (new and complete) bike. Had the C2W not been in place I’d still have bought a new Brompton, but it would have been a lot cheaper. I see the odd cargo bike with child seats on it at work. Those would easily exceed the £1500. I also see some nice road bikes too.
£1500 won’t buy an electric Brompton
Doesn't need to. If you could legitimately add to the £1500 limit to buy what you want, top it up to your heart's content. You just only get the tax incentive on the first £1500. I say £1500 - could be the old £1K or a higher £2K. But not bazillions.
Premise being you make the scheme sustainable, more equitable and not so open to hugely expensive bikes being subsidised. The priority of the scheme should be to get people riding. If you want to do it on something a bit posher, knock yourself out. As a high rate taxpayer, you 'should' be able to top it up out of your own pocket if it means enough to you. If not, you could 'slum it' on the same £1500 'cheap' bike as the lad in the post room, safe in the knowledge you paid less for it than he did.
The “but you get it back in the vitality of the bike industry” argument doesn’t hold water. If you apply that logic to everything the government has no revenue at all.
Well, I know I'm biased, but as I see it, cycling benefits the country in reducing congestion, improving health, and reducing emissions. All three of which are high agenda items. I can't think of anything else that is as far ranging.
Let me guess, you don’t commute by bike, so haven’t noticed that many people use a nice bike to commute on?
I don't know what kind of office you work in, but at my place there are usually about 50 bikes in the sheds. The vast majority are pretty bog standard hybrids and road bikes. Of the £2k+ bikes, all are ebikes except one Cannondale Topstone.
(My favourite is the mid-90s Kona Kilauea, but it's in a fairly bad way these days)
i did have a thing for the VAT removal from utility bikes but....I can see the argument that the prices would float up again
I'm not sure they would though. Cargo bikes (especially electric ones) 'look' expensive on the shop floor, and people are savvy shoppers. Especially if it was some form of capped subsidy (i.e. given as a £200 subsidy on a >£1k utility bike, or £600 on a cargo bike costing >£3k as long as they met the criteria).
Well, I know I'm biased, but as I see it, cycling benefits the country in reducing congestion, improving health, and reducing emissions. All three of which are high agenda items. I can't think of anything else that is as far ranging.
Yes, but the problem (perceived or real) is that these aren't "cycle to work" bikes. Someone driving to Hebden or Peaslake to ride their C2W dandyhorse isn't reducing congestion, and you'd probably get a better ROI on abolishing VAT on 5-a-side pitches, running shoes or gym memberships than a £2k discount on a Kenevo.
Even subsidising public transport has a potentially large impact on fitness, someone opined the other day that getting their 10,000 steps in each day only seemed possible in London.
i did have a thing for the VAT removal from utility bikes but....I can see the argument that the prices would float up again
I'm not sure they would though. Cargo bikes (especially electric ones) 'look' expensive on the shop floor, and people are savvy shoppers. Especially if it was some form of capped subsidy (i.e. given as a £200 subsidy on a >£1k utility bike, or £600 on a cargo bike costing >£3k as long as they met the criteria).
Theres good evidence from previous vat exemptions that little if any goes to the consumer. First the tampon tax, second a large VAT reduction on restaurant meals in france.
https://www.tips-and-advice.co.uk/blog-vat-on-sanitary-products
https://www.aeaweb.org/articles?id=10.1257/pol.20170504
Unpopular opinion: why restrict it? With the state of the countries health, surely anything which gets people off their sofas and outdoors has to be a good thing!