Cycle to work scheme disposal costs changed by HMRC

wealdroam

sickparrot wrote: »

That it's probably not worth doing any more. I've just had a bike through cyclescheme worth £550, I'm paying £30 per month for 12 months, which is £360, and now I'm going to have to fork out £137 to keep it at the end. I probably could have saved more than £50 if i'd just waited until next years model came out and got this one at a discount.

And just giving it back at the end is not an option, not after i've invested so much money into it.

The only advantage I can see now is the spread payments, so just find a bike shop that does interest free credit.

Sickparrot, you seem to have forgotten the income tax that you did not pay on that £360.
Is that not part of the saving too?

wealdroam

King_Nothing wrote: »

Just worked it out, my company is in a 1 year deal, If I get a £1k bike, I have to pay back £730 out of my wages, put together with the 25% I would have to pay at the end, that gives me a grand total of £20 saving lol

Spose after that, the only way I can look at it, is to get a tiny saving, and a year long interest free bike loan essentially.

King_Nothing, you too appear to have overlooked the income tax you have avoided on that £730.

If you are a higher rate tax payer, I make that alone worth nearly £300.

sickparrot

wealdroam wrote: »

Sickparrot, you seem to have forgotten the income tax that you did not pay on that £360.
Is that not part of the saving too?

Probably but that would make me less indignant and I want to be indignant:mad:

That £30 a month is what I'm actually paying, the salary sacrifice is £40, so when I add it up i'm not even saving the VAT, so how they can claim it's 'Tax free bikes to work' is beyond me at the moment.

King_Nothing

wealdroam wrote: »

King_Nothing, you too appear to have overlooked the income tax you have avoided on that £730.

If you are a higher rate tax payer, I make that alone worth nearly £300.

I'm not a higher rate tax payer.

The table I'm using looks like this:

Voucher Value: £1k
Monthly Gross Salary Sacrifice: £87.95
Approx Monthly Cost (Band A): £60.69
Approx Total Cost (Band A) Over 12 Months: £728.33

Assuming 25% value of £1k bike has to be paid at end: £250

Total: £978.33.

It says the table is illustrative, but what value could change if I applied for the scheme?

bclark

Have you got a link to this change in policy?

bunking_off

There was an article about it in the Telegraph on Saturday I think (or may have been Times on Sunday...).

Note that if your T&Cs have a residual value, I guess your employer may have to stick to them, but the difference between the HMRC valuation and what the company let you have it for becomes a benefit in kind hence taxable.

Apparently one way out of this is to structure the scheme so that the "rental" lasts e.g. for three years, but with the rentals only being payable over the first 18 months. So you end up making a final payment in year 3, based on the lower residual value that HMRC specifies for that age.

King_Nothing

bclark wrote: »

Have you got a link to this change in policy?

http://www.clarkslegal.com/Article/701/Cycle%20to%20work%20scheme%20%20fair%20market%20value%20%20clarified%20by%20HMRC

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

no.10

The organisation my employee uses to administer this scheme has suggested you just don't purchase the bike at the end of the 18 month payment period.
My employee isn't going to ask for it back, there are no registration papers associated with the bike, who is actually going to pay the 20% to officially own the bike when there is no benefit in doing so?

anewman

Coveredinbees!!!! wrote: »

£700 for a bike is it gold plated or something

£700 is cheap for a bike. Yes you can get a bike in Tesco special offers for £60, but it will be steel frame, heavy, and so unpleasant to ride it's more of an occasional toy than a way of cycling a few miles to work and back home.

Empty_pockets

Likely a lot a C2W bikes will be getting stolen in the penultimate month.