True, but if I buy one without C2W I will still generate the tax.

My realistic budget would be £2.5k, but if I bought a £5k bike on C2W would I end up putting more tax into the exchequer or boosting the economy more?

Well that depends on how you got the money. If it’s at the highest marginal rate of tax (60%) That 5k would have been 12k of income so 7k tax paid already…

If you have magic money with no tax burden attached to getting it then the bike at half the price will generate half the VAT. It’s the not paying the 7k to get the 5k that gets people frothy.

Now the likelihood is that if you are in that band then you’ll be managing you tax with AVC’s to pension and charitable donations. So it’s arguable if the tax man would have seen it anyway

Personal view: do both vat and c2w, and limit of £1k + RPI each year.

I agree with this. Both of my C2W purchases have been sub-£1k (both £750). First I had for 5 years before selling and was used almost everyday to commute. 2nd bike, bought last year, is also used to commute when I’m in the office, so admittedly a little less, and for other stuff too. I certainly wouldn’t be buying a 2-3k bike for commuting simply because I wouldn’t want it getting damaged whilst its at work. Personally i see no reason why the limit needs to be higher than £1k, but my employer increased our scheme limit to 3k last year. Was I tempted? Of course, but I have ‘enough’ bikes for the moment (apparently!!!) and no desire to find myself under the patio 🤣

I’m 40% tax payer. No fancy anything other than a workplace pension. The money would not come out of a savings pot that was somehow obtained without tax. It’d all be paid for via PAYE taxed income. That said, my wife pays much less tax than me so I think that would factor into the calculations…

The retailer still gets the VAT though, as the bike is bought at RRP and has to pay that to HMRC?

A fairly small percentage of the purchase price, say 15% goes to the retailer and onto their employees, who will probably spend it so a fair portion of that 15% goes to the exchequer.

More difficult to establish how much of that extra £2.5k spent goes back into the UK economy, especially when you consider that if I paid it as tax it would go back into the UK economy as well. Now, if it’s an Orange the calculation is a bit different….

It’s an excellent means of being tax efficient, paying for something without incurring interest, and keeping fit and healthy.

I get some of the complaints re: self employed, but then again, Class 2+4 NICs are lower rates than class 1, and are based on profit rather than income. They also have their self assessment and their tax deductible expenses.

Equally, our taxation system has many cliff edges and biases so I don’t think attacking fellow cyclists is the way to go. Take child benefit as an example – a family with one adult working, with an income over £50k starts to lose it, with it disappearing entirely at £60k. A family with two people working, earning £49k each, get to keep it all.

CycleScheme usually allows you to pay fair market value after 4 years, at 7% of package price.

Currently musing about whether I can buy a bike through the business and reclaim the VAT. There’s also a Corporation Tax benefit obviously….

Then sell it to myself through the C2W scheme. Not a 40% tax payer though, as I’m a director, so need to suss out how to maximise that element 🤔

I think you’ll be charged VAT on hire so no vat saving