Tax free bikes with the Cycle to Work scheme

custardy

http://www.hmrc.gov.uk/manuals/eimanual/eim21667a.htm

looks like HMRC have decided they can get some more cash out of this

looking at the table it would render it pointless when paying back over the short term

Age of cycle
Acceptable disposal value percentage


Original price of the cycle less than £500
Original price £500+

1 year
18%
25%

18 months
16%
21%

2 years
13%
17%

3 years
8%
12%

4 years
3%
7%

5 years
Negligible
2%

6 years & over
Negligible
Negligible

bigjl

We have a similiar scheme at work, you have set maximums, for a bike and bike gear you pay no interest and have to pay it back in 9 or 10 months.

Justin_Scotland

With the changes to the scheme it certainly doesn't make it the no brainer it used to be to see 40% - 50% savings for top tax rate payers. However it still can give an easy 14%-25% saving on a £1000 bike and an interest free loan over 12 months deducted at source with a final settlement figure which still makes it a cheaper way to get a new bike.

If you get a bike for £500 just under the threshold then the saving is larger between 23% and 32%

The higher percentage saving is if your company can reclaim VAT on the purchase.

Looks like some of the scheme providers are looking at ways to change the scheme to maintain higher savings.

gauly

Really irritating that they can introduce this change retrospectively. My husband bought a bike six months ago and was meant to pay 3% of the purchase price at the end. He doesn't get VAT back or the employers NI payments and he is a lower rate tax-payer so it wasn't an enormous saving.

Now he ends up paying back 69% of the price over the year and then 25% at the end making a total of 94% of the purchase price. He wouldn't have done this scheme if he had known they were going to change it - his employer's website say unequivocally that you pay 3% at the end!

Also, I read on one page that you have to pay VAT on the purchase price at the end? I find that very hard to believe but it would mean that the total saving would be only 1%.

Yorkie1

I tend to agree with your sentiments, gauly, as I'm in a similar position. The only consoling way I'm finding to look at it, is that it's been an interest-free loan to buy the bike etc. But budgeting for 20% is a large chunk in one go.

gadgetmind

HMG *really* seem to want Cycle To Work dead, dead, dead!

They are now saying that anyone who got a voucher should have been charged VAT on it.

http://!!!!!!!.com/34kkqkt

I guess they all want us back in cars and paying lots of VED and fuel duty.

Ian

gadgetmind

Dunno what !!!!! is all about - it should say t i n y u r l without the spaces.
Ian

custardy

gadgetmind wrote: »

Dunno what !!!!! is all about - it should say !!!!!!!.
Ian

well thats cleared that up then

gauly

gadgetmind wrote: »

HMG *really* seem to want Cycle To Work dead, dead, dead!

They are now saying that anyone who got a voucher should have been charged VAT on it.

Ian

I read that as you have to pay VAT on the voucher if your employer has claimed back VAT on the bike? Sounds like my husband is OK on that one since his employer didn't claim VAT back on the bike purchase.

I was thinking this scheme now only made sense if your company claimed back VAT or you were a higher rate tax payer. Seems like it's only higher rate tax payers left with any benefit which is a bit weird.

sct73

Can anyone help with information on payments? My old company ran this scheme and my monthly payments from my salary were £31 however my Tax & NI dropped by exactly that amount, so my take home salary didnt change.
I want to get a new bike with my new employer but am unsure if the payments were correct last time. The amount was correct but I thought I would be charged the £31 and as a result be £31 lighter in my pay each month. Was I just lucky or is this the way it works?????????