I agreed about 6 months ago with our accountant/finance guy that I’d buy a bike to work bike, he’d pay it off as an expense then I’d repay it the normal bike to work way. We don’t use a scheme, with my last bike to work bike he just took it out of my wage packet every month.

He’s being tardy paying back this one, and it’s got to the point where I’m pretty keen to have the money in my account. He moans about paying suppliers first etc.

I’ve wondered if I offered to pay it all off in a oner if there’d be any problems? The bike’s £900, does this exceed some limit for a monthly “benefit”? If so, what’s the maximum I can pay back per month?

you pay it back , you own it , you are liable for full tax on it…. bit like buying a bike from a shop .

when you pay up over time your not actually paying back the bike but paying rental of the bike over the time period.

the time period that is determines how much you are liable for at the end …. think its not depreciated as an asset over 3 years now before its tax free – but since everything changes so often this might well be dated info….

Trail_rat, when I say “pay it off”, I mean through salary sacrifice, just in one month’s pay packet. It’d be like an advance (or in this case, almost at the end of the period) rental.

The point of c2w schemes is to pay for/lease it from your pre-tax pay, thus reducing your taxable income (assuming you are a salaried employee, not a contractor/director).

In order for the scheme to work participants shouldn’t be able to pay off the balance and take ownership of the bike before the agreed end point…

It basically sounds like the company gave you a salary advance and you’re paying the loan back after tax?

If ti was an advance on your salary in tax terms then paying it back early should have no impact.

(IANATL)

It sounds like you bought the bike with a view to your employer then giving you the money back and you paying back over 12 months? This shouldn’t have happened. Your employer should have bought the bike in the first place, not you.

Simondbarnes- it’s exactly what’s happened with every bike to work bike at our place. We buy on expenses and normally it gets paid back the same month and the salary sacrifice starts.

Cookeaa – I’m proposing to pay it in one go from my salary.

Yep, I can see that.  It’s not how it should have worked.  100% the company should have made the purchase for you if it was going to be treated as c2w.  Probably more relevant to have a formal chat with someone that looks after tax returns to see if there’s still some prospect of getting it treated more favourably for Tax.

Probably the most important point is going to be if the Company issues credit cards for your use or you are expected to use your own.  If the spend was in a Company card that cleared against your account with the expectation that this would be neutral as you would have received a payment for Expenses in time to offset, then it could well be the worst of all worlds, with you on the hook for a payment your employer has no intention of financing as c2w and getting whacked for a Benefit In Kind.

Just paid on my debit card.

Yeah, it’s all back to front, the point is that they should buy the bike, then deduct it from your salary each month pre-tax. You eventually pay them back for the bike (including a final payment which is usually very small), with the discount on the bike essentially comprising of the amount of tax saved, plus whatever the difference is between the purchase price and the agreed residual value.

You’ve had to shell out the money up front, and then presumably pay more tax if they’re adding their repayment back on to your salary…….

Agree. If you’ve paid on a Debit card then stop thinking in terms of ‘paying it off in one go’. It isn’t C2W and they clearly have no intention of running the scheme correctly.  Accept you’ve bought a bike you wanted and move on.  Anything accountants could do at this point will simply complicate matters and probably cost you more money than you’ve already paid.

So, with my last bike to work bike I bought it on my card, then the same month was paid the value back in expenses by work (no tax paid on expenses). I then paid it back over 12 months. Other than the delay in the repayment of my “expenses”, is there any reason why it should be different this time if I paid it back over 12 months?

Disregarding our somewhat back-to-front way of initially buying the bike, if I were doing this the right way is there any reason not to have all the salary sacrifice go all in one pay cheque?

Don’t know, you’d need to ask a tax accountant.

To be completely honest, unless you can get your employer to refund you the payment and then start deductions I think you can forget all about this being a Salary Sacrifice but if this is important to you, you need professional advice on this one, not STW.

So the bike is yours, you own it and it is not on a list of company assets, but you claimed it as an “expense” and then agreed to the expense claim being treated as a staggered deduction from your pay?

It sort of makes sense, but I’m not sure it meets the criteria for the c2w scheme, for starters the bike is already owned by you. It’s more like a “transport loan” where you have borrowed money from the company to buy a bike/car/season ticket, which is probably what the finance guy thinks he’s setup…