Cycle to work scheme

Author
Discussion

Mattt

Original Poster:

16,661 posts

218 months

Wednesday 7th October 2015
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Heard rumours of some changes meaning bikes >£1k available to all.

Anyone know more?

ShortShift811

533 posts

142 months

Wednesday 7th October 2015
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Don't know about getting a voucher for more than £1K, but I have heard in the past that some local bike shops and nation chains will allow you to contribute the additional amount above £1K to buy a more expensive bike. Allegedly.

lukefreeman

1,494 posts

175 months

Wednesday 7th October 2015
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I've just bought a bike on cycle to work scheme that was over the £1k limit, just had to pay extra.

With a company based near the ribble river

Mattt

Original Poster:

16,661 posts

218 months

Wednesday 7th October 2015
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That's unofficial though, but has always happened.

GaryGlitter

1,933 posts

183 months

Wednesday 7th October 2015
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Used to be standard voucher limit of £1K but if your employer had a Consumer Credit License then they can issue for more.

boyse7en

6,712 posts

165 months

Wednesday 7th October 2015
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www.proc2w.co.uk


Say they can do bikes/pedelecs up to £3000 somehow, bypassing the C2W rules but still legal. The website is a bit sparse on detail for my liking.

m444ttb

3,160 posts

229 months

Wednesday 7th October 2015
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Enrolement for our scheme in 2016 opened last Friday. Still £1,000 max with no top up so I'm not bothering again. Suffice to say we are very much in the position to offer more!

numtumfutunch

4,721 posts

138 months

Wednesday 7th October 2015
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My understanding is that its limited to 1k unless your employer has some kind of credit licence

Its also strictly illegal to top up in cash but many shops will

Cheers

anonymous-user

54 months

Thursday 8th October 2015
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I'm sure a <£1000 bike is perfectly capable of getting most to work and back!
I bet my 1983 steel Peugeot did more commuting miles that 99% of cycle scheme bikes, more expensive bikes have never seen the workplace bike shed...

schmunk

4,399 posts

125 months

Thursday 8th October 2015
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numtumfutunch said:
My understanding is that its limited to 1k unless your employer has some kind of credit licence

Its also strictly illegal to top up in cash but many shops will

Cheers
This is all correct.

The other point sometimes missed is that this bike must be used >50% for commuting by the employee hiring it.

That said, HMRC is currently rather lax in auditing these schemes.


(I am a tax advisor)

Fourmotion

1,026 posts

220 months

Thursday 8th October 2015
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schmunk said:
numtumfutunch said:
My understanding is that its limited to 1k unless your employer has some kind of credit licence

Its also strictly illegal to top up in cash but many shops will

Cheers
This is all correct.

The other point sometimes missed is that this bike must be used >50% for commuting by the employee hiring it.

That said, HMRC is currently rather lax in auditing these schemes.


(I am a tax advisor)
I take it by your spelling you're not a chartered tax adviser?

Where is the strict legislation around these top ups? What is the criminal act being performed? Many shops openly advertise they accept top ups, and I know Cyclescheme even publish it on their website as an option, allowing you to increase the certificate value. Are you telling me these major companies openly flout the law?

Happy to be corrected, but I'm not aware of top-ups being strictly illegal. You don't receive tax relief on them, and the bike is still owned by your employer / cycle scheme provider )depending on your company's system) until you've chosen to make the final settlement. But at no point is the act illegal.

It's a risk to do, you would lose the funds if you decided not to pay the final settlement, and have to ensure you adhered to your company's terms (for example insuring the bike against theft, you'd have to provide adequate cover for the increased value).


schmunk

4,399 posts

125 months

Thursday 8th October 2015
quotequote all
Fourmotion said:
I take it by your spelling you're not a chartered tax adviser?

Where is the strict legislation around these top ups? What is the criminal act being performed? Many shops openly advertise they accept top ups, and I know Cyclescheme even publish it on their website as an option, allowing you to increase the certificate value. Are you telling me these major companies openly flout the law?

Happy to be corrected, but I'm not aware of top-ups being strictly illegal. You don't receive tax relief on them, and the bike is still owned by your employer / cycle scheme provider )depending on your company's system) until you've chosen to make the final settlement. But at no point is the act illegal.

It's a risk to do, you would lose the funds if you decided not to pay the final settlement, and have to ensure you adhered to your company's terms (for example insuring the bike against theft, you'd have to provide adequate cover for the increased value).
I apologise for my 05:47 typo and simplified reply whilst using the Swype keyboard on my mobile phone. I consider myself suitably chastened... rolleyes

Illegal is perhaps not the best word, but for the layman it conveys the correct message - i.e. don't do it. Does 'outside of the tax exemption' work better for you?

The point of the C2W scheme is that your employer provides a bike to you to use for commuting, and (by statute, i.e. 'legally') this is not a taxable benefit. This exemption does not extend to 'part of a bike' or 'contribution towards a bike', so if your employer is using the general exemption from regulation under the Consumer Credit Act for C2W schemes limited to £1,000, a) your employer cannot loan you a bike valued more than £1,000 and b) you may not top up the employer loan to obtain a bike valued at more than £1,000. (Employers are, of course, free to obtain a consumer credit license to issue loans of greater than £1,000.)

Receiving the tax benefit through a salary sacrifice arrangement whilst the conditions for exemption are not met is thus 'illegal'. If discovered, HMRC will gleefully pursue you and your employer for underpaid tax and NI, with potential for criminal penalties if you do not comply.

Anybody inviting you to top up your C2W voucher is inviting you to potentially pay more than list price for the bike and face the wrath of HMRC.

Maryben

93 posts

214 months

Thursday 8th October 2015
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Running my own Ltd Co from an office at home anyone know if I would qualify for a 'cycle to work' scheme ?

schmunk

4,399 posts

125 months

Thursday 8th October 2015
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Maryben said:
Running my own Ltd Co from an office at home anyone know if I would qualify for a 'cycle to work' scheme ?
In theory yes, but in practice no, for the following reasons:

  1. You would need to pay yourself as an employee sufficiently to take advantage of the tax relief - in practice it's likely for you to be better to extract funds from the company in a different way.
  2. How are you planning to use it to commute to work, if you work from home...? confused

Maryben

93 posts

214 months

Thursday 8th October 2015
quotequote all
schmunk said:
In theory yes, but in practice no, for the following reasons:

  1. You would need to pay yourself as an employee sufficiently to take advantage of the tax relief - in practice it's likely for you to be better to extract funds from the company in a different way.
  2. How are you planning to use it to commute to work, if you work from home...? confused
Many thanks for your prompt reply.

Mattt

Original Poster:

16,661 posts

218 months

Thursday 8th October 2015
quotequote all
Couldn't you use it for business mileage, also claiming circa 20ppm (?) in the process?

Mattt

Original Poster:

16,661 posts

218 months

Thursday 8th October 2015
quotequote all
Seems the info was wrong:

In this email to you, supported by advice from the FCA, a financial regulatory body, we said hire agreements as part of the Cycle to Work scheme were no longer required to be regulated under the new Instalment Exemption criteria.

The FCA have now updated their position to us, and their view is that a difference exists between Consumer Credit Agreements (to which the exemption applies) and Consumer Hire Agreements (to which the exemption does not apply).

In the meantime, this means that we will revert back to our original position:

All hire agreements as part of a Cycle to Work Scheme will remain regulated, and certificate spend for your customers will be limited to a maximum of £1000 (unless employers obtain their own Consumer Credit Licence).

The FCA have acknowledged the need to provide clearer advice on this distinction and they will action this in the near future.

anonymous-user

54 months

Thursday 8th October 2015
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Damn, guess I'll have to buy a rubbish 1k bike (for £600) to ride to work on.

Mr Scruff

1,331 posts

215 months

Monday 12th October 2015
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schmunk said:
In theory yes, but in practice no, for the following reasons:

  1. You would need to pay yourself as an employee sufficiently to take advantage of the tax relief - in practice it's likely for you to be better to extract funds from the company in a different way.
  2. How are you planning to use it to commute to work, if you work from home...? confused
Sort of similar question, I work from home though not self employed. 3 days a week I drive my son to his nursery (near where Mrs Scruff works) and then cycle home again. Bike I ride is used for nothing else other than this journey.

Pushing my luck as a 'cycle to work' d'you think?

schmunk

4,399 posts

125 months

Monday 12th October 2015
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Mr Scruff said:
Sort of similar question, I work from home though not self employed. 3 days a week I drive my son to his nursery (near where Mrs Scruff works) and then cycle home again. Bike I ride is used for nothing else other than this journey.

Pushing my luck as a 'cycle to work' d'you think?
yes