I have a small Ltd co that employs my wofe and myself.

I’m looking at using the Cycle to Work scheme to get us two new bikes. I did this about 5 years ago and used cycle scheme but looking at it again now, wondered if it’s easiest to just do it ourselves & buy the bikes direct. If we do this, what paperwork do I need to put on the accounts, and “between” the business and ourselves?

We pay ourselves mainly via dividends so I guess we can do the “salary sacrifice” against that and just have a paper transaction to say so?

Any experiences??

Got an accountant ? If so ask them.

We are a small company and do cycle to work ourselves. Dead easy – we just have a simple lease agreement in place. Has been no hassle at all. Only diffenece for me is I get a salary every month – don’t know if that affects it

I’m no accountant, but I’m pretty sure you can only do salary sacrafice against salary, not dividends. I assume your company pays you and your wife about £650 a month each – so just salary sacrafice against that.

I don’t do cycle to work through my ltd company, but I do childcare vouchers, so it mght be similar. In that case you have two options:
1 – get your ltd company to buy the bikes direct (in my case childcare bouchers) and you pay the company the salary sacrafice
2 – go through a scheme

Option 1 saves you the cost of the scheme fees.

Why don’t you “write” them off against your tax?, for legitimate business/travel use to get to work and back home.

you are meant to actually cycle to work so if you live and work at home it can be hard to justify

Four person payroll here, me and one other bought bikes in the last 18 months on company credit card and salary sacrificed the payments over 12 months. Easily done, though I do have a minor worry about the value to be written off. Realistically it is a negligible amount and not been challenged by auditors.

You lot are missing the point. If you own a ltd company you pay yourselves a dividend right? Which means you do a personal (ie self employed) tax return. pop the bike on that, fully tax deductible, without any salary sacrifice shenaigans or lease agreements, and no limit on cost (although I havent claimed the 5k dh bike) . My accountant was happy with my cargo bike and the wifes hybrid .

Not though of this, just started our first business. When we actually have some money I’m off to the bike shop, weeeee!

My company bought a folding bike that it allows the staff to use for commuting purposes only. If anyone pops down to the sandwich shop on it, it would become a benefit in kind and would have to go on a P11D. That’s what my accountant advised. Our folding bike has only been used for commuting.

What toys said. The tax exemption that all these schemes are based on means that your company can just buy the bike and make it available to you (as an employee), provided that it is used primarily for commuting and business purposes. No need for rental agreements or salary sacrifice.

If anyone pops down to the sandwich shop on it, it would become a benefit in kind and would have to go on a P11D.

Technically true. Unless the sandwiches were for a client, in which case it would be business use.

Thanks pdw – can it be written off in Y1 as an expense or is it a capital purchase with depreciation?

Do you need to be a limited company?
We are a partnership.

You can just buy the bike through the business and use it with no Benefit in Kind – there is no legal requirement for salary sacrifice.

There is a regulation about providing C2W on the same terms to Directors and employees. If you employ somebody at a later date you can set their C2W budget, but if you don’t make salary sacrifice it is technically meant to be a company-wide policy.

My company bought a folding bike that it allows the staff to use for commuting purposes only. If anyone pops down to the sandwich shop on it, it would become a benefit in kind and would have to go on a P11D. That’s what my accountant advised. Our folding bike has only been used for commuting.

Your accountant doesn’t understand the scheme.

Planned on doing something similar for a commuting bike and spoke to my accountants. Advice I got was just to have the company buy the bike (no limit on cost either.) Remains a company asset but value gets written off over time.

My company bought a folding bike that it allows the staff to use for commuting purposes only. If anyone pops down to the sandwich shop on it, it would become a benefit in kind and would have to go on a P11D. That’s what my accountant advised. Our folding bike has only been used for commuting.

So if you use your work laptop in your lunch hour to check your own personal mail does that go on the P11D? Most companies have a policy that allows some reasonable personal use and I believe that’s fine. I’d check again with the accountant on that one!

This is all really good to know – I’ve asked for clarification from my Accountant but I think you’ve just opened up a whole world of possibilities! Pickenflick, here we come!!

I would ask your accountant to confirm what they suggest would definitely be okay if HMRC looked into the full facts. Some of the suggestions above contradict the guidance you’ll find on the HMRC website…. 🙂

We’re a small business ourselves and we wanted to find a smart way to help more cyclists get on good bikes. There’s a lot of self employed and small businesses that are not able to get tax benefits from Cycle To Work Schemes.

A number of our self employed customers make use of our leasing plans for their bikes as it works out very tax efficient for them. The same applied for small limited companies:

No £1000 limit
Can reclaim the VAT if VAT registered
Can offset 100% of the lease against tax

Seeing as the lease starts at only 65% of the RRP, it means that they can avoid paying about 50% of the costs. Insurance and servicing are added into the monthly payment – again tax deductable.

It also lets them easily change their bike every 2 years if they want to.

Bigger businesses are able to pass on these tax benefits to their employees in a really straightforward way as well without the complication of salary sacrifice schemes, VAT, and changing employment contracts etc.

By the way, the lease can also work out well for regular employees looking for a bike worth over £2k.

If you’d like any more advice, feel free to give me a call on
020 8133 6432 on Monday and I’ll be happy to help. Ask for Paul.

Just buy the bikes through the company – if you are VAT registered you can claim that back and right the purchase price off against tax. It’s what I’ve done with the bike I use to get to work. The company bought it and technically own it but none of my colleagues ever seem to want to ride it. It helps that the ride to work is off road and the bike is always covered in mud. When I investigated this when first looking at the cycle to work options 8 years ago I spoke to the guy who was running the Halfords scheme and it was him that suggested that as we were only a very small company this would be the simplest thing to do. The only thing he did say was that by doing that the company would be responsible for the bike being kept in a safe condition so I told the boss I was now the company bicycle safety officer.

Hi avdave2,

Buying is always an option, and we offer that option as well 🙂 Cash or 2 years 0% finance. In fact om the right bikes, we can offer 5 years 0% finance!

However, the leasing works well for both cashflow and tax efficiency.

If you buy at the RRP or even with 10% off, you have to pay that capital amount off. With the lease you do not.

There are also implications for where the “asset” sits on the balance sheet and how it is written down.

I’m not an accountant, but it is often more cost effective and tax efficient to lease over buy.

HMRC can also be more difficult during tax investigations if a company has a number of bicycles that it has bought and has written them off rather than leased. Your accountant would fight your corner for you though.

You can just buy the bike through the business and use it with no Benefit in Kind – there is no legal requirement for salary sacrifice.

This.

I did it with a frame and added bits as I went along, just expensed it through my Ltd in the way I’d expense anything else (did a lot of travelling, so always pushing through expenses).

Biggest concern would be the VAT Man, but since we were on the fixed rate scheme what you spend (the companies money) on is irrelevant.

I did it with a frame and added bits as I went along, just expensed it through my Ltd in the way I’d expense anything else (did a lot of travelling, so always pushing through expenses).

You should be careful with this. The tax exemption that means that this is not a taxable benefit is for the provision of a bicycle plus safety equipment, not for bits of a bike.

Thanks pdw – can it be written off in Y1 as an expense or is it a capital purchase with depreciation?

It’s a capital purchase, but you should be able to write the whole thing off in Y1 thanks to investment allowances or whatever they’re called.

Can offset 100% of the lease against tax

I keep hearing this touted as a benefit of leasing but surely this is only possible if the bike is wholly and exclusively for business purposes as I don’t think the C2W tax exemption can be applied if you’re self employed?

http://www.hmrc.gov.uk/manuals/eimanual/eim21664.htm

Thanks for that link asterix! It does look a lot simpler than I had imagined. I had basically given up on the cycle to work schemes because of the limit of £1000. This seems like a legitimate way to get a new commuting bike worth £2000.