- Cycle to work scheme – still worth it or not?
It’s worth remembering:
A) to pay cash for the bike you would have had to earn £1400, to have £1k to spend. This way then is effectively 40% cheaper
B) its an interest free loan, and tax free money
C) the final payment is scalable depending on how long you keep the bike without buying it from you employer, but even after year 1 it’s £250 cheaper unless you can get that discount through your LBS. I think after year 4 it’s a negligible amount.Posted 6 years ago
My understanding is that HMRC had clarified some issue in the last week or so about VAT and C2W which ate in to saving. Also guidance for Market value of bikes over £5/600 is 25% after a year? I may be accused of abusing scheme as I already share commuting duties between roadrat and knackered giant OCR but am considering swapping OCR for something better – hence the QPosted 6 years agoTrimixMember
I charge our C2W staff 5% after a year as a nominal fee to extend the agreement until the value is zero.
As others have said, you still save the tax and its an interst free loan. Ive also found most bike shops give me a 12% discount as we do the C2W paperwork, not them.
When I say paperwork, that actually means a simple form I got off the internet that the employee signs. There is not really any admin to do.Posted 6 years agotomasoSubscriber
The final value fee of 25% after 1 year’s hire imposed by HMRC is only if you end the hire agreement and receive the taxable benefit (bike). If you increase the hire period the residual value upon which HMRC want £ for reduces accordingly. I’ve just extended the hire period for another 3 years for £70 instead of paying £250 to own my bike.
However, due to some fiddle some company has done the EU have ruled that these types of benefits are subject to VAT on the hire payments!Posted 6 years agoGarry_LagerSubscriber
The final payment seemed ok to me when I looked at it – the extra 3 years or whatever it is definitively did not. That’s with cyclescheme though, maybe different with other set ups.Posted 6 years ago
Riding a bike for 4 years that you don’t own isn’t that appealing to me – it’s too long a time period to be committed for, particularly as you’re talking about bikes under a grand so not major long term purchases.pdwMember
I think the review of Rolls Royce lead to the final value guidance, not the VAT change.
The answer is that it can still be worth it but it depends on your scheme. If it’s done through a commercial operator like Cyclescheme, they will take a cut from the shop which may limit your ability to get sale bikes, or a discount.
Also, the amount that the company charges you varies depending on the scheme. Most companies actually make money on the scheme as they don’t have to pay employer’s NI on the rental payments, but there’s no reason why the rental payments can’t be lower to take this into account.Posted 6 years agoCheeky MonkeyMember
Our lot do it through Cyclescheme and I took the “13th monthly payment to lease for another 3 years at which point it’s yours at no extra (as HMRC will have valued it at bugger all” (to paraphrase). This seems to be the ‘Scheme’s fix for the valuation guidance HMRC issued.
However, I don’t like the fact the bike remains the Scheme’s and so, if HMRC change things again, I could have yet another set of “rules” applied where I might have to pay more.
Personally I’d rather have taken it as a BIK and paid the income tax on that. Not an option through our lot though.Posted 6 years ago
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