cycleschemey things - final value?
Discussion
Apologies if this has been done to death, I did a search and couldn't find anything, honest.
My mob are starting the tax free scheme, and it got me looking for a bike. I found a couple that look interesting, but I'm concerned by the 'market value' final payment idea.
The firm are adamant they will have to charge a fair market value at the end of the scheme, and that not to do so has all sorts of awful tax and employer's NI implications.
Everything I've found seems to suggest that in practice 5%-10% is what is paid, but this lot won't have it.
I don't fancy paying £600 over the year for a £1000 bike, (which at that point will have cost the firm nothing other than the lost interest for a year, which will be compensated by reduced ENI payments anyway) only for them to want another £500 odd quid for me to buy 'my' bike off them.
Any pointers?
My mob are starting the tax free scheme, and it got me looking for a bike. I found a couple that look interesting, but I'm concerned by the 'market value' final payment idea.
The firm are adamant they will have to charge a fair market value at the end of the scheme, and that not to do so has all sorts of awful tax and employer's NI implications.
Everything I've found seems to suggest that in practice 5%-10% is what is paid, but this lot won't have it.
I don't fancy paying £600 over the year for a £1000 bike, (which at that point will have cost the firm nothing other than the lost interest for a year, which will be compensated by reduced ENI payments anyway) only for them to want another £500 odd quid for me to buy 'my' bike off them.
Any pointers?
Edited by Justayellowbadge on Wednesday 17th March 16:47
Justayellowbadge said:
Everything I've found seems to suggest that in practice 5%-10% is what is paid, but this lot won't have it.
That's what I'm basing mine on. I organised the scheme for the company I work for (usign Cyclescheme) and I plan to give them 5% of the original value as a final payment.My final payment was 5.75% of the list price of the bike, described as a 'fair market value final payment' and taken 18 months after delivery. There are very clear guidelines on HMRC's website, if I remember correctly.
My employer is a multi-billion pound public institution, so these things tend to be done correctly.
My employer is a multi-billion pound public institution, so these things tend to be done correctly.
Nick_F said:
My final payment was 5.75% of the list price of the bike, described as a 'fair market value final payment' and taken 18 months after delivery. There are very clear guidelines on HMRC's website, if I remember correctly.
My employer is a multi-billion pound public institution, so these things tend to be done correctly.
Haha thats what i would of thought working where i do... no one seems to have an answer...My employer is a multi-billion pound public institution, so these things tend to be done correctly.
All i know is finance have got the invoice and are going to spend 10 days looking at it before it goes back to the Cyclescheme guys to then give me my voucher...
There are usually various options at the end of these schemes but as your employer are probably not interested in collecting second hand bikes, it's in their interest to sell it to you for a 'nominal payment'.
The final payment is a bit odd as usually the employer isn't 'allowed' to publish the final selling cost as a condition of the scheme. It's HMRCs strange rules not your employer or the schemes.
You tend to pay in total something like 60% + 5% usually 5-10% in final payment but often you have to simply trust your employer.It's a strange situation but it's HMRCs rules to maintain tax exempt status.
The final payment is a bit odd as usually the employer isn't 'allowed' to publish the final selling cost as a condition of the scheme. It's HMRCs strange rules not your employer or the schemes.
You tend to pay in total something like 60% + 5% usually 5-10% in final payment but often you have to simply trust your employer.It's a strange situation but it's HMRCs rules to maintain tax exempt status.
my employer charges a 5% fair market value fee at the end of the scheme which is then given to charity.
5% of original purchase price seems to be the typical value,
but it is suggested by cyclescheme that a valuation is sought at the end of the scheme, either by the employer or employee to get a fair market value figure on which to settle
5% of original purchase price seems to be the typical value,
but it is suggested by cyclescheme that a valuation is sought at the end of the scheme, either by the employer or employee to get a fair market value figure on which to settle
Update on final value...
Im about to finish my scheme, Cycle Scheme confirm I will be one of the last on the 'old' final payment plan, 5%+VAT.
HMRC dictate that they now have to charge a more accurate fee. You will have to self assess the bikes condition between A (best) and D (tattiest). They will then charge accordingly. The lady I spoke to said the most they would charge, on a £1000 bike in A1 condition will be £200+VAT.
So in reality a £1000 cycle will cost under £750...
There is probably a table giving details, but not yet made public!
Im about to finish my scheme, Cycle Scheme confirm I will be one of the last on the 'old' final payment plan, 5%+VAT.
HMRC dictate that they now have to charge a more accurate fee. You will have to self assess the bikes condition between A (best) and D (tattiest). They will then charge accordingly. The lady I spoke to said the most they would charge, on a £1000 bike in A1 condition will be £200+VAT.
So in reality a £1000 cycle will cost under £750...
There is probably a table giving details, but not yet made public!
HMRC are currently cracking down on the final value aspect of the scheme so it could mean bikes end up costing people a lot more than they expected. The scheme is designed to be an affordable hire system to encourage people to ride to wokr, where the bike is hired over 12 months and then if wanted bought at fair market value at the end of the hire period. So far it's been a way for people to save money on a bike that largely isn't used for commuting at all and as such is a waste of taxpayers money.
It is perfectly feasible yo uoculd prchase a £1000 bike, pay out £600 and then face a bill of £400 to buy it at the end. Weirdly the more you hammer the bike and don't look after it the better off you are as it will have a much lower value at the end of the period.
Oh, it's also in the pipeline that HMRC will start demanding evidence off employers that the bikes are actually being used for commuting at least 3 days per week and if it isn't the tax and NI will be billed back.
I think this final value aspect may be the death knell for the scheme and as a cycle shop owner I hope it will, in my view most people purchasing bikes on the scheme neither need nor deserve a tax break on a bike they are nearly always purley using for leisure and not commuting.
It is perfectly feasible yo uoculd prchase a £1000 bike, pay out £600 and then face a bill of £400 to buy it at the end. Weirdly the more you hammer the bike and don't look after it the better off you are as it will have a much lower value at the end of the period.
Oh, it's also in the pipeline that HMRC will start demanding evidence off employers that the bikes are actually being used for commuting at least 3 days per week and if it isn't the tax and NI will be billed back.
I think this final value aspect may be the death knell for the scheme and as a cycle shop owner I hope it will, in my view most people purchasing bikes on the scheme neither need nor deserve a tax break on a bike they are nearly always purley using for leisure and not commuting.
Session said:
Oh, it's also in the pipeline that HMRC will start demanding evidence off employers that the bikes are actually being used for commuting at least 3 days per week and if it isn't the tax and NI will be billed back.
This would be a significant departure from the basis of the scheme. The rules presently require that the bike is mainly used for commuting. There is a big difference between this and a situation where someone mainly commutes by bike. Session said:
It is perfectly feasible yo uoculd prchase a £1000 bike, pay out £600 and then face a bill of £400 to buy it at the end. Weirdly the more you hammer the bike and don't look after it the better off you are as it will have a much lower value at the end of the period.
Who would undertake the valuation? On what criteria would this be based? I can't see tax inspectors venturing out to check on the condition of your bike. Session said:
HMRC are currently cracking down on the final value aspect of the scheme so it could mean bikes end up costing people a lot more than they expected. The scheme is designed to be an affordable hire system to encourage people to ride to wokr, where the bike is hired over 12 months and then if wanted bought at fair market value at the end of the hire period. So far it's been a way for people to save money on a bike that largely isn't used for commuting at all and as such is a waste of taxpayers money.
It is perfectly feasible yo uoculd prchase a £1000 bike, pay out £600 and then face a bill of £400 to buy it at the end. Weirdly the more you hammer the bike and don't look after it the better off you are as it will have a much lower value at the end of the period.
Oh, it's also in the pipeline that HMRC will start demanding evidence off employers that the bikes are actually being used for commuting at least 3 days per week and if it isn't the tax and NI will be billed back.
I think this final value aspect may be the death knell for the scheme and as a cycle shop owner I hope it will, in my view most people purchasing bikes on the scheme neither need nor deserve a tax break on a bike they are nearly always purley using for leisure and not commuting.
Please see my previous post!, CycleScheme told me that the most they will charge, for a 1000 pound bike in 'self assessed' A1 condition will be 200 plus @vat. I wonder how many will be self assessed as A?It is perfectly feasible yo uoculd prchase a £1000 bike, pay out £600 and then face a bill of £400 to buy it at the end. Weirdly the more you hammer the bike and don't look after it the better off you are as it will have a much lower value at the end of the period.
Oh, it's also in the pipeline that HMRC will start demanding evidence off employers that the bikes are actually being used for commuting at least 3 days per week and if it isn't the tax and NI will be billed back.
I think this final value aspect may be the death knell for the scheme and as a cycle shop owner I hope it will, in my view most people purchasing bikes on the scheme neither need nor deserve a tax break on a bike they are nearly always purley using for leisure and not commuting.
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