cycle scheme - con trick? advice needed please.

Keith

Custardly - I think the RM scheme has the different disposal charge because it is 18 months instead of 12.

custardy

Keith wrote: »

Custardly - I think the RM scheme has the different disposal charge because it is 18 months instead of 12.

maybe but its quite a difference
I was looking on the HMRC link and on a £500 bike it doesnt really work out to any of their percentages

jimmo

Sorry to harp on about the same point, but if, under the RM scheme, employees pay the "collection and disposal charge" of £35 at the end of the period of hire and get to keep the bike then RM is breaking the law.
That would, most definitely, not be the first time that a major employer has fallen foul of Tax Law and, if RM employees are getting a pretty good deal from their employer's (tax) incompetence then good for them.
Strictly speaking, if the reality is that RM are selling the bikes to employees for £35 the employee is liable to tax on the benefit of the difference between the £35 paid and the value of the bike from the HMRC valuation table.
In my experience the reality is that when an HMRC audit uncovers the wrongdoing the employer "voluntarily" stumps up the employee's liability (plus a bit) because it is cheaper for the employer to pay up a global figure than go through their records, produce accurate Returns for a number of years and then face up to a disgruntled workforce who will suddenly face an unexpected tax liability through their employer's incompetence.
On the basis of what you say I would suspect RM of getting it all wrong but if HMRC ever catch up with them they will pay up and change the rules of their scheme to comply with current tax law. Those who effectively escape their personal tax liability through their employer's incompetence will be none the wiser but those that get caught up when the employer changes the rules to comply with tax law, will think their employer is suddenly ripping them off.
However, that does not really help the OP. He needs to consider whether the deal on offer is good for him. If it is, fair enough. If it isn't he can walk away. End of.
If RM employees are getting a good deal because their employer is breaking tax law he cannot use that to get a better deal for himself. All he can possibly achieve is to bring forward the time when HMRC catches up with RM.

John_Pierpoint

HMRC waking up to the concept of depreciating a bike, as though it was a car, is a relatively new change in tax law. I have my doubts that second hand bikes really do have the values in the table. Those companies large enough to bother with all this administration were allowing the employees (partner?) to keep the bike at a cheap rate; not as a tax free perk, but to avoid the prospect of the firm's car park being cluttered up with rejected bikes.

Nice idea from the politicians killed off by the tax man?

My son for one says he cannot be bothered with the scheme now and is keeping his old bike for the moment.

[That is a shame, I could do with a replacement bike;)]

custardy

well thats the thing
looking at the OPs breakdown it makes it a pointless exercise no pun)
all it offers is a way to pay a bike up at near full retail
you could save more buying in the annual sales

JournalGirl

Another option is that your company gives you the bike at the end of the 12 month period. This would then show on your P11D as a payment of £250, which you would be taxed on, so in reality would cost you £50 (Depending on your tax rate)

aeb_2

Don't do this if you are near to retirement and are in a final salary scheme (not so many now I know)
As it reduces the final salary the pension calculation is less

nikki1520

Just as an aside, have a guess at a reasonably large employer who doesn't allow their staff to use this scheme?

HMRC - always keeping up with the trends!

Nosht

Can't be bothered to read all the posts but my £500+ bike cost me only 1/3 of its value.


N.

custardy

Nosht wrote: »

Can't be bothered to read all the posts but my £500+ bike cost me only 1/3 of its value.


N.

great attitude for forum use :beer: