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?
[quote=DT78]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.
The answer is just a few posts above, but here it is again:
[quote=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.
Whether Cyclescheme do this in the offer they make you is another matter.
[url= http://blog.evanscycles.com/commuter_urban/new-cycle-to-work-scheme-what-does-it-mean-for-me/ ]Evans has a handy article on its website explaining the changes[/url]
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 - MemberHopefully 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 [url= http://blog.evanscycles.com/commuter_urban/new-cycle-to-work-scheme-what-does-it-mean-for-me/ ]Evans[/url] think too:
[i][b]"Q: So what happens to people already in the scheme?[/b]
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]
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
funkynick
I'm going to, no intention of selling it any time soon. But common courtesy would have been to let us know. Not that I would expect anything else from my employer - they informed us that 10% of my business unit were being made redundant in a round robin email which included a headline item about the enormous profit they had just made.
geoffj - I know but the same tax rules apply right? Their scheme will be affected in the same way.
Oh and for those people with something written into their agreements this is from the CycleScheme FAQs:
[i]What happens at the end of the hire period?
At the end of the hire period employees may be given the opportunity to buy the bike for a full market value, however this cannot be an automatic entitlement. [b]The cost of full market value cannot be stated before or during the hire period as this could be considered a benefit in kind and therefore not be eligible for tax benefits[/b]. Many employers opt for Cyclescheme to take ownership of the bikes at the end of the hire term, in which case any offer sale to the employee will come directly from Cyclescheme.[/i]
I run the scheme where I work and am just wondering if there is anything stating how much has to be paid each month? If I set the payments over 12 months to equal 75% of the value and then charged the other 25% as a final payment / transfer of ownership, would that not get round the problem and not leave the company out of pocket?
Yes. There's an answer on the Evans site about this. The only issue is that the employee may not buy the bike at the end of the term, leaving the employer out of pocket, until they sell the bike.
I'll be taking the extra 3 years. Not the end of the world for me. I spoke to cycle scheme on the phone and it made things a bit clearer. I also asked them what would happen to returned bikes. they said they would be given to charity or disposed of. i asked if cycle scheme would be selling any but they said no.
Handsomedog.. it's the company's bike, they can do with it what they like! You are only hiring it remember...
So that means they'll pay for repairs?
It's all a bit rubbish really as the company are making money from this and could now make more by charging fair value - that is they've recouped the cost through the monthly payments - and more as save Employer's NI - then they can make even more cash by charging you 25%.
As people have mentioned it could be seen as a taxable benefit so as to prevent tax eveasion you just pay the tax on the FMV. So why isn't this an option to most people? 2 guys at work are getting stung for this. OK stung is maybe not the right word it was all in the fine print etc etc, but when I did the cyclescheme thing a few years ago it was sold to me as [i]work buys bike you pay that off that tax free[/i] NOT [i]work buys bike, you hire it, bike never belongs to you, you have to buy it at the end[/i]. (altho no doubt it[b] was[/b] in the contract I signed but not in the sales patter...missold possibly?)
I can't really see the problem myself - as geoffj says you pay around a net 60% of sticker price over a year, then £70 to cyclescheme and 3 years later you own the bike, effectively saving a couple of hundred quid on a £1k bike.
For me, I've used my current commuter in various guises for about the last 7 years, so keeping the next one for 4 isn't a problem. I can only assume that most of the whiners on here are those who have (ab)used the scheme in the past to get a new bike every year, and thus those people are now losing out.
cyclescheme and your employer or whoever is running the scheme for you has had to revise massively upwards the final valuations of the bikes,
as both the individuals using the scheme, and any company running these schemes was avoiding a large amount of tax by devaluing the assets worth at the end of the scheme. This is why so many serious cyclists with N+1 bikes invested in the scheme for N+2 bikes..
You don't need to spend £1k on a bike to work, if you made a handsome profit in the past well done, if you ever for a moment thought the tax man wouldnt clamp down on this tax loophole wakey wakey..
The scheme may now be less popular for serious cyclists but may still support those that actually have a need of a cheap bike to commute on, as was originally intended. As for bike shops that have survived on poor service and high turnover through the scheme - a few may go to the wall.
you pay around a net 60% of sticker price over a year, then £70 to cyclescheme and 3 years later you own the bike
That is an appropriate option but employers don't have to offer this. What seems sensible to me is the monthly payments should add up to 75% of the bike value (without VAT) then the employee pays 25% at the end to buy the bike from the company.
