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More than seven in ten participants are basic rate taxpayers
Which means 3 in 10 are high rate tax payers. So, as only 16.2% of the UK workforce are currently high rate tax payers that means high rate tax payers are roughly twice as likely as basic rate tax payers to take advantage of the scheme.
Then.....when you factor in the 40% saving instead of the 25% saving that 30% of users make and......(this is a bit of a stretch I admit as back up by supposition rather than statistics) high rate tax payers buy more expensive C2W bikes than basic rate tax payers and the possible tax income stream to government coffers lost will be as much if not more from the high rate participants than the basic rate participants. i.e. the 16.2% of the workforce gain more than the 83.8%.
does any of these thing above being basic rate tax payer, or working for an SME stop someone being middle class? (if there is such a thing anyway) - it was bit of a throwaway comment btw..
Did the CtWA gives any stats on usage of bikes for the purposes of getting to work btw? from my personally experience would seem that quite a few are being used for commuting frequently, but also there are quite a lot of bikes on the scheme where the intention is clearly to never use for getting to work.
for basic rate tax payers, you are often better off buying a bike in the sale, and if not able to pay in once go, to do via a 0% credit card deal etc - especially for lower priced 'normal bikes' - eg someone buy something like a Kona Dew etc.
All those calling it a middle class tax dodge, is it any worse than pension, company car schemes, private medical or anything else? Car Schemes offer a far greater benefit to the employee the C2W.
no it is clearly no worse, but they all has the same thing in common in that they tend to offer more advantage the more you earn and the more you earn the more likely you have to take up as many / all of those options.
If bikes are truly used for get to work then not a dodge, but look at how many MTB only companies offer c2w as a means of buying a bike, pretty sure there is a very limited group of people commuting on full enduro rigs..
quick examples:
Cyclescheme at Privateer – Privateer Bikes
Cycle To Work | Bird MTB // Born in Swinley, Built in the UK.
comparing use of C2W scheme, a legit scheme to save a few hundred ££ (depending on the scenario, as I said it may not save you anything and add a bunch of strings....) for a the majority to a certain person who was in charge of HMRC briefly doing something dodgy to save millions of tax due when already a multi millionaire is a little bit of a stretch.
Much more is 'saved' by individuals pilling money into their pensions to reduce their tax burden. C2W doesn't even come close. I'd love to see some real stats about the average bike bought on the scheme (mine were £1k, back when £1k got you a decent bike) and £800. My expensive bikes were bought direct from LBS at end of season as the discounts were greater, and for a good chunk of time the limit was £1k and coundn't be topped up....
All those calling it a middle class tax dodge, is it any worse than pension, company car schemes, private medical or anything else? Car Schemes offer a far greater benefit to the employee the C2W.
Compared to Pensions and ISAs the sums are minuscule.
comparing use of C2W scheme, a legit scheme to save a few hundred ££ (depending on the scenario, as I said it may not save you anything and add a bunch of strings….) for a the majority to a certain person who was in charge of HMRC briefly doing something dodgy to save millions of tax due when already a multi millionaire is a little bit of a stretch.
They are completely different, one is a legitimate HMRC scheme (who no obligation to ride the bike to work), the other was fined £5m, by HMRC, for failing to declare £30m he happened to have forgotten about. I guess in theory he could have been prosecuted for it, but it's cheaper all round if he just pays the fine.
Anyone got an easy to implement model for salary sacrifice schemes that ensures the benefits are equal across tax bands?
government will squander our tax money regardless. may as well have a shiny new bike..
well... ummm... i used the scheme (the halfords/tredz one). bike was £2600, reduced to £2300. I am £130 a month less off after tax than before the scheme. By my calculations i am paying just under £1600 for it.
I ride it to work as much as possible. If i do 5 days a week, thats about 130 miles. Saves me a bunch on petrol. And is good for my mental and physical health. Plus i love riding bikes.
Well, thats my input... let the squabbling continue.
@blackflag do you mean in the existing system or an idea for how to do it better?
existing system, if you try to "top up" or somehow give those in the lower tax band the same as those in higher you MAY risk them being stung for a BIK. Maybe the chap who posted above can say how his company did it avoiding the risk of BIK
my idea would be just remove VAT from bikes, then everyone gets the same discount. A hell of a lot simplier to implement, no middle men snaffling admin fees for doing very little. spend more, save more irrespective of your income.
I am listening, I’m just not agreeing….
I have used C2W 3 times,
Fairy nuff. Soz. I was under the impression that you were one of the people that had been put off by the scheme's many contradictions, unclarities and fudges,without realising that they nearly all melt away like a rainbow as you approach them 🙂
and once for a small amount of parts (2020?) which was a massive ball ache, halfords refused to do it and take the voucher and I eventually had to use tredz and buy slightly different stuff which would have been cheaper direct to merlin.
Yep, that's a good point. One of the main stupidities of the scheme is that it varies so immensely between employers and providers. Some just let you spend as much as you want wherever you want, some stick to a £1k max and/or Halfords. Which puts you at a disadvantage.
Anyone got an easy to implement model for salary sacrifice schemes that ensures the benefits are equal across tax bands?
Cap the value at £750 for normal bikes and £3000 for cargo bikes. You can get a perfectly good bike, helmet and lock for £750. Beyond that, it's state-sponsored luxury...
but look at how many MTB only companies offer c2w as a means of buying a bike, pretty sure there is a very limited group of people commuting on full enduro rigs..
quick examples:
Cyclescheme at Privateer – Privateer Bikes
Cycle To Work | Bird MTB // Born in Swinley, Built in the UK.
You've deliberately chosen two companies that only make MTBs. Do you want a list of companies that don't make MTBs but offer C2W as a balance? It will be a lot longer than Bird and Privateer. I could probably put together a long list of companies who only make e-cargo bikes but offer C2W. Who needs an e-cargo bike for riding to work? Not me, so should probably be banned!
Btw, I'll be riding my 150mm FS to work on Friday. I ride in every day and use my gravel bike, but I'm planning on heading home via some local MTB trails. This will happen more frequently as the days get longer and the trails dry up. I could equally bring a jump bike to work because I pass some world class jumps on the way home. That's the thing about cycling isn't it - we don't all do the same thing.
Who needs an e-cargo bike for riding to work? Not me, so should probably be banned!
People who take their kids to school en route to work? Which I do see happening btw inside and outside of London.
I picked Bird and Privateer as examples of where I don't think the scheme should apply given the bikes offered in terms of cost and likely usage.
YT is another example, though at least they have a gravel bike now:
Green Commute Initiative | Support | YT United Kingdom (yt-industries.com)
anyway all this is not too serious, have fun on Friday - one way to beat the train strike!
Cap the value at £750 for normal bikes and £3000 for cargo bikes. You can get a perfectly good bike, helmet and lock for £750. Beyond that, it’s state-sponsored luxury…
Even at Halfords that doesn't give much choice at all, and almost nothing that would last a year of my commute (20 miles per day, almost every working day). It would also take C2W out of pretty much every local bike shop.
if anyone is actually looking for a reasonable all round bike - any a deal better than c2w:
Kona Dew Plus 2022 Bike (winstanleysbikes.co.uk)
and more:
Search results for: 'kona dew' (winstanleysbikes.co.uk)
You can get a perfectly good bike, helmet and lock for £750. Beyond that, it’s state-sponsored luxury…
You clearly have not read the Brompton price sheet. And Bromptons really are very commonly used to ride to work (often as mixed mode transport). It was the residuals on them that prompted the exit fee of 7%.
Much more is ‘saved’ by individuals pilling money into their pensions to reduce their tax burden.
Yes but that's a legitimate tax saving. It's a well used tactic to incentivise things the government wants you to do - and they want you to save for your own retirement so they don't have to cough up.
However, us lot buying luxury bikes is not a legitimate use, IMO, especially as it's a 'cycle to work'. A scheme to encourage people to exercise, with tax breaks on stuff like gym membership and club usage would be great, but that's not what this is.
government will squander our tax money regardless. may as well have a shiny new bike..
It really doesn't work like that.
Even at Halfords that doesn’t give much choice at all, and almost nothing that would last a year of my commute (20 miles per day, almost every working day).
Rubbish. If it's got discs it'll last as long as anything. Probably more so cos it's likely to be 8 speed not 12.
However, us lot buying luxury bikes is not a legitimate use, IMO, especially as it’s a ‘cycle to work’. A scheme to encourage people to exercise, with tax breaks on stuff like gym membership and club usage would be great, but that’s not what this is.
A ‘cycle to work’ scheme without any actual requirement to cycle to work....
If all tax breaks are this easy to exploit and effectively unenforceable it's no wonder we've ended up with Zahawi thinking he did nothing wrong. It starts with a grand off a shiny bike and the next minute you're setting up offshore accounts.
For those discussing the ethics of spending a couple of thousand on a bike and that it is a middle class luxury. Take a look at BEVs and benefits in kind (or lack of).
We ought to sort out the tax-free BEVs costing £40,000 upwards before we start tackling the injustice of £2000 on a bike.
The fairer approach would be to make all cycling purchases VAT free. THis would take away the C2W scheme margin, the residual value charge (kick in the teeth), the differential tax approach, and include non working / low earning people and children equally.
Even at Halfords that doesn’t give much choice at all, and almost nothing that would last a year of my commute (20 miles per day, almost every working day).
Rubbish. If it’s got discs it’ll last as long as anything. Probably more so cos it’s likely to be 8 speed not 12.
Yes, you're possibly right but doing 4000+ miles a year you don't want a bike with cheap components that regularly wear out. Also, you want it to be suitable for your commute. Under hybrid bikes at Halfords, there's a choice of 5 - count 'em! - different hybrid bikes under £750 that aren't Falcon or Carrera. One that might be ok for my ride, a £600 Boardman hybrid, still comes with nasty Tektro brakes and cheap tyres.
Tell me why I should accept cheap brakes and tyres when I do more miles on my bike than most people do in their expensive cars?
The fairer approach would be to make all cycling purchases VAT free.
Absolutely. Or reduced VAT.
See Portugal.
A ‘cycle to work’ scheme without any actual requirement to cycle to work….
I suppose you 'could' try to view it like that if you wanted to.....the government's guidance to employers for eligibility.....it's guidance rather than law but uses 'must' not should. And I suppose if the bike was put in the shed and never touched again you could say you don't have to cycle to work. But if used one for leisure I'd saying it would be fair to assume it must be used once for cycling to work. If course it's be left undetermined if it means 50% of frequency, distance or time so not very mandatory sounding. But I think most would read than and infer riding to work should form a good chunk of its purpose.
The following conditions
must also be met:
• An employee must not, at any point during the hire period, own the cycle;
• At least 50% of the cycle’s use must be for ‘qualifying journeys’, i.e. commuting to
work purposes;
• The offer of the use of hired cycles must be made available across the whole
workforce, with no groups of employees being excluded. This does not
necessarily have to be through a salary sacrifice arrangement in each case.
You could of course say, why does it matter - exercise is exercise. If that's your line of thinking would you be comfortable with golf sticks, gym membership and sailing boats having the same access to tax breaks? And what aspects of public life would you like to see paired back to compensate? There's a broader conversation of course about if we'd all get healthier if we went this way and save more money than we lost but singling out bike shaped exercise toys from others was never the intention.
but singling out bike shaped exercise toys from others was never the intention.
You do realise that commuting to work by bike has massively increased in the time that C2W has existed? As pointed out much earlier in the thread, the responses on a MTB forum may be rather different than the ones you'd get if you stood by the side of a cycle path in a major city this morning and asked about C2W.
Tell me why I should accept cheap brakes and tyres when I do more miles on my bike than most people do in their expensive cars?
Umm, that's nothing to do with the discussion. The point is that tektro brakes and cheap tyres are just fine for commuting to work for most people, and that means that a £750 bike is fine. You can buy what you like, of course, as can I, but you shouldn't expect a tax break for indulging your hobby. Nor should I.
If that’s your line of thinking would you be comfortable with golf sticks, gym membership and sailing boats having the same access to tax breaks?
If it were up to me I'd have publicly funded sports facilities free at the point of delivery, with capacity increased to match demand - across ALL sports.
You do realise that commuting to work by bike has massively increased in the time that C2W has existed? As pointed out much earlier in the thread, the responses on a MTB forum may be rather different than the ones you’d get if you stood by the side of a cycle path in a major city this morning and asked about C2W.
That's why it's a good scheme for its intended purpose - but people like us should not be taking the piss.
It's strange reading these respones.
Some people only seem to be able to view cycling as a "sport", not a useful form of transport.
@TiRed I got a Brompton on C2W. After it was paid for the hire period was extended to a total of 6 years and I avoided having to pay for the residual, despite the bike probably being worth what I paid for it. In fact it wasn't fully 'mine' until last year, by which time I'd worked for 2 companies other than the one I got the bike through, and been retired for 18 months.
This is an extract from the email I got at the end of the first year, once I'd finished paying for it
OPTION ONE (recommended) - Continue to use the equipment free of charge
Complete the Hire Agreement below and you can continue to use the equipment free of charge for a further 60 months. This new extended Hire Agreement is between you and Evans Cycles, which means if you leave your employer you can still continue to use the equipment at no further cost. At the end of the term we are permitted to transfer ownership to you free of charge.
Some people only seem to be able to view cycling as a “sport”, not a useful form of transport.
Three grand road bikes or full bouncers are pretty much for sport, yes.
Umm, that’s nothing to do with the discussion. The point is that tektro brakes and cheap tyres are just fine for commuting to work for most people, and that means that a £750 bike is fine. You can buy what you like, of course, as can I, but you shouldn’t expect a tax break for indulging your hobby. Nor should I.
At what point does you car scheme car move from utility to luxury? Should the car scheme be capped at £20k? That's probably about the equivalent £1000 in bike terms. This would have a far greater effect on public finances than the cyclescheme.
If that’s your line of thinking would you be comfortable with golf sticks, gym membership and sailing boats having the same access to tax breaks?
I think encouraging exercise could be a net gain to the exchequer long term as the cost of dealing with inactive lifestyles is in the £10bns per annum via the NHS and lost work (and tax revenue) / incapacity benefits etc.
what aspects of public life would you like to see paired back to compensate?
It should be able to pay for itself long term...
Should you be able to spend £20m tax free on a yacht, No. Should you get a yearly allowance for sports related activity - why not. Will some people abuse it and never exercise - yes, and it was ever thus and will ever be so.
NB I've not actually used C2W as my employers have never offered it, and even if they did, I wouldn't be that interested in using it.
Should you be able to spend £20m tax free on a yacht,
OT and I agree with the sentiment, but wonder how many expensive assets, like yachts, are actually owned by companies, with the MDs as the only user?
I've worked in SME's where lots of assets 'owned' by the MD are actually company property, from cars, mobile phones, fuel for the vehicles...
OT and I agree with the sentiment, but wonder how many expensive assets, like yachts, are actually owned by companies, with the MDs as the only user?
If you worry about all the corner cases, and all the ways it could possibly be abused, you'd never manage to pass any legislation. Leave it up to HMRC to chase then up down the line and if it becomes a big issue, amend the legislation.
Does it really matter that a small % of C2W bikes never ride to work? Is it worth scrapping the whole scheme just to stop that?
Someone will always getting away with scamming the system - that's just a given.
Does it really matter that a small % of C2W bikes never ride to work? Is it worth scrapping the whole scheme just to stop that?
Someone will always getting away with scamming the system – that’s just a given.
If that was the only issue, I'd be there with you. But it's not. It's the haves benefitting more than the have nots. Further compounded by the haves being more likely to take the piss and spend it on a toy of now unlimited value than an actual cycling to work tool.
So yes, I too would scrap and make bikes VAT free instead. Only If it was about commuting I'd ask manufacturers to apply for certain models to be exempt based on thier fitness for commuting on. As someone who commutes 150miles+ a week average on a 27mile each way route I'd probably be shafted myself as I don't commute on a very atypical commuter bike, but thems the breaks.
I suppose the other way to do it would be the first £1k of a bikes value being VAT free - so no one, no matter how wealthy got to save more than £200.
Does it really matter that a small % of C2W bikes never ride to work? Is it worth scrapping the whole scheme just to stop that?
My guess is that % isnt exactly small. The money would be better invested in ensuring workplaces have decent facilities for cyclists. I know several people despite their c2w bike who didnt cycle because the facilities were crap.
The only issue in scrapping VAT on bikes (in lieu of C2W) is perhaps the unintended consequence of making them less affordable. I suspect the option to pay monthly without incurring credit charges is a much of an attraction as the tax savings for a lot of people, especially on lower incomes.
It would also be interesting to see how the sums add up in terms of the reduced tax take in scrapping VAT on all bikes regardless of their use, versus income tax lost via C2W.
Also, I suppose a voluntary scheme needs to be attractive as much as it's fair in order to be effective. If it wasn't popular, it wouldn't last long as it the cost of administering it becomes a burden.
Under hybrid bikes at Halfords, there’s a choice of 5 – count ’em! – different hybrid bikes under £750 that aren’t Falcon or Carrera. One that might be ok for my ride, a £600 Boardman hybrid, still comes with nasty Tektro brakes and cheap tyres.
Tell me why I should accept cheap brakes and tyres when I do more miles on my bike than most people do in their expensive cars?
I've done 60 mile rides on my Dew, quite happily, with its Deore/Acera groupset and "nasty" Tektro brakes. I'd say the problem here is snobbery rather than suitability in this case, that and you are clearly the exception not the rule.
As for car schemes, I'd scrap the whole lot for anyone not doing actual business travel.
I’ve done 60 mile rides on my Dew, quite happily, with its Deore/Acera groupset and “nasty” Tektro brakes. I’d say the problem here is snobbery rather than suitability in this case, that and you are clearly the exception not the rule.
This +1.
What I would say is that I notice that the cheaper Acera or Claris is
A) plastic in feel, for the split second you shift for
B) not quite as durable, but that's touchpoints and moving parts. Chainring and cassette last longer being steel.
The only issue in scrapping VAT on bikes (in lieu of C2W) is perhaps the unintended consequence of making them less affordable. I suspect the option to pay monthly without incurring credit charges is a much of an attraction as the tax savings for a lot of people, especially on lower incomes.
Personal view: do both vat and c2w, and limit of £1k + RPI each year.
One that might be ok for my ride, a £600 Boardman hybrid, still comes with nasty Tektro brakes and cheap tyres.
Tell me why I should accept cheap brakes and tyres
Ugh - the one council flat that is at all convenient for me, a 2 bed in Islington, still comes with nasty Wickes bathroom fittings and cheap carpets.
Tell me why I should accept cheap fittings and carpets...
I never understood why this existed for those who don't cycle to work. HMRC quite rightly won't let me dodge tax so why would I subsidise other people's leisure riding? At least change the name and call it a fitness incentive. But then on that basis why can't gym membership or tennis equipment become tax deductible?
My last cylce-to-work purchase was a new drive train from CRC (chain, cassette, chainrings, rear mech) to replace the worn out one on my commuter. I use it every day to/from work, and it was getting annoying how nasty it felt.
I had no idea there was some kind of ethical dimension to it though.
Considering the amount of subsidies motorists get without any thought whatsoever it seems a bit navelgazetastic tbh.
It's not supposed to exist for people who don't cycle to work but having HMRC or employers monitor use would make make the scheme unviable.
tbh, theres no way i would have bought the kenevo if i wasnt able to cyclescheme it, not only do i get it paid up front, i only pay for a fraction of it. i hitch the tagalong and leave that at the school, which saves me blocking someones drive each morning, but im also able to claim my business mileage between sites and since i got it chipped its an absolute hoot. so some of us are actually using them for work.
Can we all stop saying this scheme should be scrapped.
Yes it favours higher earners more than lower earners. BUT... if this was binned, what will we get in it's place ? Answer ? Absolutely nothing. Jezzer kHunt isn't going to produce a new tax break for cyclists is he. No. Only tax dodges for his mates, tax dodging ex chancellors, and for PMs WAGs who gain tens of millions each year for doing ****all yet only pay 30k tax.
1st thing that SHOULD but won't happen is to take VAT off bikes and bike things for everyone. But bikes are for plebs not the rich. So the pleb tax will remain.