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Slight hijack, does it have to be ridden to work ever?
Yes. Its supposed to be used for that purpose. Cant remember what it is but supposed to be x% of trips to work (although that can be partial eg cycling to the train station for the rest of the way).
We got a warning last time it opened which came across as "it doesnt apply for home workers but we arent going to check and chances are the government wont bother so try it if you want".
one stood out as offering the particpant the best ‘value
I think that was GCI, but not got personal experience of them myself
In re: "nobody checks what you use your bike for".
I am not a cycling-related tax lawyer, but...
https://help.cyclescheme.co.uk/article/44-do-i-have-ride-to-work-everyday
...this suggests that technically one should *mostly* use the bike (or kit) purchased through a cycle scheme for work-related journeys.
During the COVID lockdown era the government actually announced an easement to this requirement in recognition of the fact that employees were being required to stay at home (without the easement employees would technically have to pay tax on a benefit in kind):
https://questions-statements.parliament.uk/written-statements/detail/2020-12-17/hcws676
So that suggests to me that, legally speaking, one should be using equipment purchased through a cycle scheme for work, even if you can practically ignore that requirement because nobody ever checks.
I'd quite like to be proven wrong on this point as I work from home and my employer and I previously considered that the cycle scheme would effectively be tax fraud for us 🙁
Don't forget, they got Al Capone in the end for a tax dodge...
Could be they are reluctant to essentially lend you the full price of the bike as it does come up as an outstanding debt on their balance sheets wuntill paid off.
In the past, at least, the reason was to go above 1k needed a specific consumer credit licence which presumably has a whole bunch of paperwork/costs associated with it. Hence most companies kept to that limit although those companies which already had the licence for their day to day business could offer more.
Now though the law got changed so instead of going via the company its direct from the cycle scheme provider for whom it makes sense to get the licence.
If you buy the bike for £X, and pay over 12 months. At the end of the 12 month period of 'hire', you have to pay the market value of the bike to the hire company?
Its right that the payment isnt to buy it, but to hire it?
How much do they charge you to buy it at end of the 'hire' period? They say fair market value..... anyone got examples?
(company im working with is £3k, 12 months only, no additional funds allowable to upgrade, and its effectively a 12 month hire, pay at end/extend hire/give it back)
from the Halfords C2W site in regards to using the items to cycle to work:
The government guidelines state that you should use your bike and accessories for commuting for at least 50% of its usage however you do not have to log your bikes mileage and we thoroughly encourage you to use your bike in your spare time!
But as stated, no one ever checks. How could they? Whilst officially, you should use it for work, there is nothing stopping you from not.
If you work from home I can understand this might be harder to justify, but again, its unlikely that anyone from HMRC or whoever checks.
We have had people buy groupsets, suspension forks, bikes, spares, all sorts on our scheme (again, its the halfords one, so my experience and comments are based on this, but from what i gather, they are all pretty similar).
Once the 'voucher' is issued, i am not even sure our accounts or HR department have access to what it was spent on.
@SSS - the Halfords scheme works in a way that at the end of the 12 months you then 'hire' the bike for an additional 4 or 5 years. But this hire costs zero. Its basically a period of time that the bike then loses all value, so HMRC write it off.
from the C2W website:
Once your hire period has come to an end, we’ll get in touch to discuss your options. This will include the opportunity to extend the hire of the cycle at no additional cost until HMRC deem the value to be negligible. This is typically 4 or 5 years, and once this agreement has finished you will become the rightful owner!
@v7fmp cheers for that. my company scheme wasnt that explicit when i read the Ts and Cs....
If you work from home I can understand this might be harder to justify, but again, its unlikely that anyone from HMRC or whoever checks.
Aye, fair enough. I don't imagine for a moment that it'd be worth anyone's time trying to validate usage. Not least because there's no requirement for the individual to keep any kind of records.
I'm currently on my fourth bike to work bike, and the first one I've actually used to commute on! Though TBF, I was actually a cycle commuter when I got the previous PlanetX Superlight, Genesis High Latitude singlespeed and Whyte 629. Behold the magnificent Trek District 4 Equipped!
Thing is, you can still easily buy an adequate bike to cycle to work on for £1k (or less).
Do you really want him to unpick your request any further and discover you have no intention of riding the £3k gravel sled (That technically belongs to the company until you pay the final settlement fee) to work?
It's a bit of a minomer as companies can quite happily offer you a "Drive to Work" scheme under salary sacrifice, where you get a car from your pre-tax pay, and then pay BIK as if it were a company car. Which is 2% for electric cars.
People should stop the handwringing about not rocking the boat in case it gets closed, and start demanding parity with the car schemes.
my company scheme wasnt that explicit when i read the Ts and Cs….
Because they're not allowed to be specific. It's one if the crazy nuances of the scheme. That's why the Halfords text quoted uses words like "typically" and "may". If they specify it too strictly then it becomes hire purchase. The whole scheme is such a shambolic mess. Just weird that a portion of our taxes goes towards two different government departments trying to outgame each other ( HMRC and whoever does C2W)
It’s a bit of a minomer as companies can quite happily offer you a “Drive to Work” scheme under salary sacrifice, where you get a car from your pre-tax pay, and then pay BIK as if it were a company car. Which is 2% for electric cars.
People should stop the handwringing about not rocking the boat in case it gets closed, and start demanding parity with the car schemes.
Exactly. Hence my frustration about the Merc AMG that I can effectively have tax free.
Exactly. Hence my frustration about the Merc AMG that I can effectively have tax free.
But your company doesn't have to fund the full purchase price of that up front. They do with a bike.
Indeed they do. But it's an utterly trivial amount of money for them.
Bear in mind that this is a company that happily chucks me an additional 13% on top of any additional pension contributions that I happen to make because " since you're not taking it as salary, we don't have to pay employer's NI so why don't you have it instead.."
The amount they save on employers NI far outweighs any risk they have on the bike cash they have to stump up up front.
The problem is that someone in Central finance has deemed that £4k is an obscene amount of money for a bike ( which of course it is)
But für some reason they don't think that £53,000 over 5 years is obscene for a car ( which it is)
People should stop the handwringing about not rocking the boat in case it gets closed, and start demanding parity with the car schemes.
This.
As far as i'm concerned i pay more than enough tax to justify taking advantage of a tax free bike purchase - even if it doesn't see the office very often (or ever)
Those with Halfords vouchers… it’s worth doing a bit of research and shopping about. Other places take Halfords C2W vouchers, e.g. Sonder. Not sure how it works
We used to take Halfords vouchers but Halfords made it such a pain to redeem them and took 3 x as much percentage than CTaW etc that we started refusing them as we made so little on the bikes
Does anyone else work for a company that refuses to offer a C2W scheme?
Mine doesn't despite listing it as a benefit on their recruitment page for a couple of years. When a few employees asked to use the scheme it took the HR department three months to come back with the answer that no scheme was on offer and three months after that to remove the "benefit" from recruitment page.
The frustrating thing is that we are constantly being told about employment "benefits" which are almost completely worthless - e.g. £50 per year towards dental bills - that does not cover one check up at my practice.
If any of you own or run a Ltd company, you can buy a company bike or bikes for employee use that is/are 100% tax deductable and potentially you can get the vat back if you are registered.
As far as i’m concerned i pay more than enough tax to justify taking advantage of a tax free bike purchase – even if it doesn’t see the office very often (or ever)
My issue is that its a perk for the better off rather than those who need it. As a higher rate tax payer why should I get a subsidised toy and minimum wage workers get nothing?
minimum wage workers get nothing?
Are you sure this is correct?
Lots of lower income people cannot afford cars and bike to work instead. I bet more 500-1000£ bikes were bought on C2W than 5k dream machines.
Back in 2021 my ex-company HR dept made a mistake and said no limit. I said really? Really really?
So I ordered a Colnago C64! Then the company finance team sh*t a brick, I had a chat and suggested I pay the entire sum up front so its not on their books, and we did just that. £9.5k bike for just over £4k 🙂
Go talk to them and be super-nice 🙂
Are you sure this is correct?
Yes thats correct, you're not allowed to offer the scheme to anyone who would subsequently drop below min wage after the deduction due to the way that actual minimum wage is calculated. I mean you literally could, but if HMRC inspected the company they would deem those people as having been paid < min wage.
No way thats insane, they could go an buy a bike themselves and it would cost more. This is a little nanny statish.
My expereince of accounting and HMRC though, this does not suprise me one bit.
Are you sure this is correct?
Depressing isn't it - high rate tax payer gets to save a truck load off their 'weekend stead' vanity bike that they 'want'. Minimum wage worker who actually 'needs' a cheaper way to get to work can't access it.
It's such a stupid system. There must be better uses of government funds (yes, I appreciate they are not giving money to the scheme, just choosing not to collect monies otherwise due, but it comes to the same thing) so encourage actual cycling to work by those that need the help most.
This is a little nanny statish.
No, it's just the usual tax avoidance perks for the better off dressed up as altruism. It's a total sham of a system.
All the legal stuff is quite complex but there are some legal limits depending on you employer:
-Employer run scheme with no FCA permissions - £1k limit
-Employer run scheme with appropriate FCA permissions - no limit
-Third party to run the scheme (e.g. Cyclescheme, Cycle2Work, Halfords, Bike2Work, Cycle Solutions) - no limit
Even if there isn't a legal limit many employers choose to impose their own limit on the schemes for a variety of reasons. In most cases it's cashflow reasons as the employer usually has to pay for the cost of the bike in full up front. There's minimum wage restrictions too, and recovering funds if the employee leaves can be a faff, so some might want to limit this exposure by having a cap.
The vast majority of employers tend to use a third party scheme just to avoid the hassle of administrating the hire agreements and bike purchases. An employer (definitely not mine...) might be FCA authorised, and hold consumer hire permissions, but may choose to outsource to CycleScheme to avoid the hassle. They might also hypothetically impose an arbitrary £2k limit for no good reason, in spite of the HR Director being an avid cyclist...again, hypothetically speaking.
The third party schemes are easy for employers but aren't ultimately that good for employees or bike shops. The third party schemes charge a commission (typically 5-15%) to bike shops so they have to absorb this cost, or pass this cost onto the customer in some cases e.g. Bird. It's a shame more employers don't run the schemes themselves internally, but I can see why they don't as it's a legal, regulatory, tax, and operational minefield.
Technically speaking, the government guidance says that 50% of the bikes use should be for 'qualifying journeys’, i.e. commuting to work purposes, but no one, not even the government, gives a shit. No one is policing this. Get some forks, or a DH rig, no one cares. It's much easier to do this with the third party schemes as you just get a voucher which can be used at shops that accept them. If you employer runs the scheme internally it's a bit harder to ask Debbie in HR to order some Fox 38s.
My issue is that its a perk for the better off rather than those who need it. As a higher rate tax payer why should I get a subsidised toy and minimum wage workers get nothing?
I agree, its a perk for those of us who are a bit better off - however i think it probably also puts a little money back into the economy - as an example i'd have not bought a new bike this year had i not been able to use C2W.
Ultimately every bike purchased by a working age adult might get used to replace a few car journeys, regardless if that journey is to work or not - and that has to be a good thing.
It benefits the cycle industry the same way as company car tax rules benefit the motor industry. And it's higher earners who get the most benefit from both.
Depressing isn’t it – high rate tax payer gets to save a truck load off their ‘weekend stead’ vanity bike that they ‘want’. Minimum wage worker who actually ‘needs’ a cheaper way to get to work can’t access it.
It’s such a stupid system
Yes
No, it’s just the usual tax avoidance perks for the better off
dressed up as altruism. It’s a total sham of a system.
Yes
however i think it probably also puts a little money back into the economy
Oh spare us the trickledown economics bullshit.
Ultimately every bike purchased by a working age adult might get used to replace a few car journeys, regardless if that journey is to work or not – and that has to be a good thing.
No. This is again just misguided justification. Well off people buying shiny carbon mtbs does not necessarily replace car journeys. In fact it probably increases them.
A system which gives the lucky few 50% ( or thereabouts) off a carbon MTB, but gives less well off 25% off and minimal wagists **** all is wrong.
Justifying it by trickledown or otherwise is wrong.
A system which gives the lucky few 50% ( or thereabouts) off a carbon MTB, but gives less well off 25% off and minimal wagists **** all is wrong.
If you are going to argue against it, then get your facts right. Typically the figures are 42% and 32%. That might vary if the provider is offering the employer a discount, or if the employer is using a financed scheme, but you couldn't have the same employer giving their employees 50% for higher rate and 25% for lower rate.
The issue is one of minimum waged workers being told what they are allowed to do with their pay, not whether George the over-paid accounts manager has bought a carbon MTB.
Account managers are often on relatively low basic salaries, topped up with commissions which aren’t taken into account for C2W purposes
I’ve heard…
A system which gives the lucky few 42% off a carbon MTB, but gives less well off 32% off and minimal wagists **** all is wrong
(With thanks to IJon)
I agree, its a perk for those of us who are a bit better off – however i think it probably also puts a little money back into the economy – as an example i’d have not bought a new bike this year had i not been able to use C2W.
I'd imagine that's minimal if at all, once the commission gets taken the retailer is going to get very little. Good for the manufacturers but that's going to be of limited benefit to our economy.
but you couldn’t have the same employer giving their employees 50% for higher rate and 25% for lower rate.
The peak discount is 62% if you're earning between 100 and 120k, as that's the rate of tax you pay, making a 4 grand sled just £1500
No. This is again just misguided justification
I did suggest at work once doing a comparison between the number of people using cycle to work vs the number cycling.
I suspect the money could have been better invested on some half decent facilities at the office for the cyclists. Even with just 3-5 regular cyclists it struggled.
I’d imagine that’s minimal if at all, once the commission gets taken the retailer is going to get very little
The commission is roughly the same (within a percent or two) of the charge for using interest fee finance. How many LBSs complain about that, or refuse to use it?
The peak discount is 62% if you’re earning between 100 and 120k, as that’s the rate of tax you pay, making a 4 grand sled just £1500
Apologies for only giving figures for the 99% of people who use it. 😀
How does the 62% discount work? The GCI calculator at £125k still kicks out a 42% saving?
How does the 62% discount work? The GCI calculator at £125k still kicks out a 42% saving?
Because people earning £100k plus like to bang on at every opportunity that there's a bit of a dead band where you lose child tax credits, tax free allowances etc. And because they either don't taper or taper steeply you pay ~62p on the 100,001'st pound you earn, but only 40p tax on the 120,000'th pound you earn.
Not so much 1st world problems as 0.0001th world.
See also:
More than half of Britons on £80,000 to £100,000 a year think they earn ‘about average’
It’s due to the gradual reduction of you tax free allowance from £100k I *think*
Edit, what TINAS said
Re the 100k thing, whilst I agree it's a first world problem, it's not *that* rare.
8% of households earn more than 100k and 16% in London. Obviously most of that will be two earner families. The top 1% has an entry of 120k ish and the top 0.1% is more like 400k plus (IFS numbers).
The number of people in this bracket will presumably increase as the threshold has been frozen since it was introduced and inflation is obvs running high. It is going to remain frozen for the foreseeable too.
As I say first world problem and to me it seems more sensible to put the 45% bracket to start at 85k or some other high number and then ditch the whole taper thing to stop all the tax avoidance that happens at 100k (such as using the c2w to reduce taxable income). Everyone I know on more than 100k reduces their taxable income to 99.9k using a combination of pension contributions and c2w in order to preserve the tax free child care and personal allowance.
The commission is roughly the same (within a percent or two) of the charge for using interest fee finance. How many LBSs complain about that, or refuse to use it?
Really? Someone flung 5-15% about further back, that looks a lot like mark-up and then some.
The third party schemes are easy for employers but aren’t ultimately that good for employees or bike shops. The third party schemes charge a commission (typically 5-15%) to bike shops so they have to absorb this cost, or pass this cost onto the customer in some cases
Really? Someone flung 5-15% about further back, that looks a lot like mark-up and then some.
How much do you think finance companies charge for using their services?
The peak discount is 62% if you’re earning between 100 and 120k, as that’s the rate of tax you pay, making a 4 grand sled just £1500
If you are going to argue against it, then get your facts right. Typically the figures are 42% and 32%
If you are going to diss someone for not getting their facts right, then get your facts right. 🙂
Edit, never mind
8% of households earn more than 100k
i would imagine a high percentage of that is from 2 or more incomes
The very next line....
Obviously most of that will be two earner families.
God I'm sooooo bored:-)
Edit. Never mind too 🙂