How to Assess Work CYOD Scheme

RobinGBrown

My workplace is about to introduce a Choose Your Own Device (CYOD) scheme. I've highlighted hwat I think are the most revant aspects:

You can choose from a list of over 100 items such as Tablets, Macs, Desktops/Laptops/Notebooks, Smartphones, Televisions, Game consoles, Cameras, etc.

This is a scheme that allows you to pay for the item monthly over 2 years via a salary sacrifice, followed by a final payment of 6% to purchase the item outright.

That means that if you are employed and a taxpayer, you will save tax and national insurance on those 24 payments.

However the Inland Revenue have regulated for schemes such as these and will claw-back half of these tax savings in the following tax year via an adjustment to your tax code.

(Technically this is known as a Benefit in Kind for assets made available to an individual for private use and it may trigger a process whereby you have to fill in a tax return).

Even so, you will end up paying less than the RRP and it's spread over 24 months.

As a higher rate taxpayer (lucky me!) this would seem to be, on the surface, a tax efficient way of budgeting for items I would otherwise have bought anyway.

However, I'd like to know how to assess the scheme for value. I'm assuming that the prices for the devices won't be the best you can find so I need to work out, once the final details are available, whether or not an actual saving is made.

BrassicWoman

You can't calculate it without knowing how the taxman value this as an employee benefit. Do they have any numbers for that yet?

RobinGBrown

No numbers yet just that statement that the IR 'will claw-back half of these tax savings in the following tax year'

ReadingTim

RobinGBrown wrote: »

No numbers yet just that statement that the IR 'will claw-back half of these tax savings in the following tax year'

Ok, so that cuts the savings from 40% to 20%, and don't forget the final payment of 6% to own the device, which brings your total "saving" down to a percentage somewhere in the mid teens. You also risk getting dragged into completing a tax return, which could be a challenge if you've always fallen under PAYE; having HMRC and/or your employer mess up your tax code in years 2 and 3, and by the time you've finished paying for the device, it's getting on a bit, in technological terms. You should also consider what happens should you leave the company, or get made redundant.

As you say, you don't know what the list price is from the CYOD scheme; however, for the sake of a few percent of the price, you may wish to avoid the hassle, and find something online, which you could always stick on a 0% for new purchases credit card, if you wish to spread the payments over time.