Cycle to work scheme

[Mike_C]

Has anyone on here set one up for their company?

Are they worth it?

We don't run one at the moment but we could, assuming it doesn't cost the Company any money. I understand I could save around 50% on the cost of a new bike as well, is that correct? As I would save the VAT, NI and PAYE - plus the Company can claim the VAT back (hence me saving on it), reduce the employer NI contributions and claim capital allowances on the bike.

Anything I should beware of, as it all sounds a bit too good to be true?

[sjg]

There are some issues around the end of the agreement, final value and how you get taxed on that "benefit". Lots of people were writing off the entire cost over a year and effectively the company giving away a £1000 bike after 12 months which is a little dodgy from a tax point of view. Now lots of places are offering to just extend the agreement to 3 years (but with no payments in that time) to reduce this.

Worth pointing out too that most bike shops will only do C2W on bikes at full RRP (because there's some paperwork on their side that takes time to do) so fine if you're after a new 2011 bike, but you could usually get a decent saving anyway on last year's model anyway.

[Mike_C]

Well I would assume that because me (as an employee) would be paying for the bike by monthly sacrifice, transfer of ownership at the end of the 12 months would not be an issue? Say I bought a £1,000 bike which after deducting VAT, NI, PAYE, etc costs says £600. I pay £50 a month via salary sacrifice, so have paid £600 for it by the end of the year - what would be the problem of the Company transferring ownership to me with no final fee?

I guess it's all hypothetical anyway - it's not like you get a V5 for a bike, although I guess it would sit on their balance sheet and then have to be disposed of at zero value. Hmm.

[Raven Flyer]

Mike_C said:

Well I would assume that because me (as an employee) would be paying for the bike by monthly sacrifice, transfer of ownership at the end of the 12 months would not be an issue? Say I bought a £1,000 bike which after deducting VAT, NI, PAYE, etc costs says £600. I pay £50 a month via salary sacrifice, so have paid £600 for it by the end of the year - what would be the problem of the Company transferring ownership to me with no final fee?

I guess it's all hypothetical anyway - it's not like you get a V5 for a bike, although I guess it would sit on their balance sheet and then have to be disposed of at zero value. Hmm.

The IR guidelines state that the bike, if in reasonable condition, should be transferred at 25% of its value when new.

On this basis, you are paying £850 for a £1000 bike. You could probably get yourself savings of close to 15% if prepared to shop around/haggle so the only real saving is from effective interest free payments for it. It makes more sense if you are a 40% tax payer.

With the new final payment guidelines, it is a lot of work for your company to administer, for little benefit.

Consider also, were you to lose your job or chose to move jobs, the outstanding balance would become payable from your final salary payment.

[Mike_C]

Is it really that much work though? I mean, surely just fill in a form and off we go.

At the end of the year, do HMRC need to see a receipt of payment for 25% of the bike then? I mean, how would they know?

[anonymous-user]

Mike_C said:

Is it really that much work though? I mean, surely just fill in a form and off we go.

At the end of the year, do HMRC need to see a receipt of payment for 25% of the bike then? I mean, how would they know?

Mike in reality the company can give the the bike at the end of the year, you will then be liable to Income Tax & NI on the 25% rather than the full 25% itself and your company has disposed of an asset on the books.

You/Company will have to complete a P11d to show the BiK or handle it in payroll to show the appropriate in and out. Our scheme here gives the bike to the employee and then splits the BiK 50:50 between the Employer and Employee, the employer then has to pay additional ER NI on their share of the 50%, we manage this through payroll.

That is just the end process we manage in house, the actual set up is a piece of piss apparently, but we use cyclescheme for that bit, you don't have to use their end of scheme process.

[okgo]

What about the 3 year extend?

Thats what most people are doing.

[anonymous-user]

http://www.cyclescheme.co.uk/calculator

The figures and info is here...
I about to sign up for my 3rd bike on the scheme, couldnt be easier as an employee...

[anonymous-user]

swerni said:

That is a massive assumption.

You are liable for the 25%, if the company pay it on your behalf is not part of the scheme

It's not an assumption either your company will agree to this or not, ask them, it has nothing to do with the hire period, the simple fact is if you extend the hire period with with Evans or Cycelscheme your company have just given the bike to them for nothing (so why wouldn't they do the same for you?) it has the same impact on their asset register.

The only complication occurs as it is a transfer of a company asset to an employee(EE), so the EE should be charged as if they'd received the Fair Market Value of bike as salary, so it has a BiK implication that they EE and/or Employer(ER) must stump up for on the EE Tax & EE NI (& ER NI if the EE doesn't pay the full EE Tax & EE NI due).

If the Bike goes to Evans or Cyclescheme there is no tax required to be paid by the Employer or Evans/Cyclescheme on the transfer of that asset between companies (not sure why), and you pay the reduced but full level of the Fair Market Value 4 years after you first brought it and 3 years after you finished paying for it.

Edited by anonymous-user on Wednesday 11th May 12:29

[Mike_C]

Think I'll go with the Evans scheme where they take ownership at the end of year 1 and the transfer it after 6 years (as the bike will likely be over £500).

Cheers for the info!