Cycle2work tax question

sonypc100

Hi

Trying to work this out for a relative but I’m not sure 

They have 2 jobs, one pays around 28k and one pays around 12k but the 12k jobs is built up partly of allowances (subsistence) that aren’t taxed. 

The 12k jobs includes the c2w scheme and they are looking at a 3k electric bike, the 28k jobs doesn’t offer it. 

Will the salary sacrifice and discount as such be based on their combined salary and tax bill for the year or only the salary of the 12k job 

sorry if that doesn’t make sense!

molerat

The sacrifice will be against the wage from the job that offers it.  They cannot sacrifice below minimum wage in that job.

Squint

Try asking the higher paying job if they will offer it. My work started a scheme when I asked one of the owners who was a keen cyclist.  My husband's still refused though!

PyGuru

The salary sacrifice will only apply to the £12k job since that's the one offering the scheme. As molerat mentioned, they can't sacrifice below minimum wage for that job, so they should check how much of their taxable income is available for sacrifice after allowances.

If the £28k employer is open to suggestions, Squint's advice is great—asking if they'd introduce the scheme could be worth a shot, especially if they have employees who cycle. Otherwise, they might need to explore alternative financing options for the e-bike.

Username03725

Good advice above. If suggesting introduction of C2W to an employer it probably helps to clarify that the employer doesn't need to understand the nuts & bolts of C2W nor does it need to take on all the admin. 

See bike2workscheme.co.uk for an explanation that can be easily passed on to employers who may be reticent about it.

Herzlos

On the £12k job you're not going to save anything but get installments. On the £28k job you'd save 20% BUT you'll need to pay a 7% fee to buy the bike at the end. 4% if the spend is under £500, that won't get you a decent e-bike, but could get you safety gear, tools, lock etc. 

You're probably best trying to buy at a discount without the scheme, or go 2nd hand where you could be saving about 50%.

Nasqueron

Herzlos said:

On the £12k job you're not going to save anything but get installments. On the £28k job you'd save 20% BUT you'll need to pay a 7% fee to buy the bike at the end. 4% if the spend is under £500, that won't get you a decent e-bike, but could get you safety gear, tools, lock etc. 

You're probably best trying to buy at a discount without the scheme, or go 2nd hand where you could be saving about 50%.

7% fee / extended loan still means a saving of 25% on the bike price

Herzlos

Nasqueron said:

Herzlos said:

On the £12k job you're not going to save anything but get installments. On the £28k job you'd save 20% BUT you'll need to pay a 7% fee to buy the bike at the end. 4% if the spend is under £500, that won't get you a decent e-bike, but could get you safety gear, tools, lock etc. 

You're probably best trying to buy at a discount without the scheme, or go 2nd hand where you could be saving about 50%.

7% fee / extended loan still means a saving of 25% on the bike price

I don't think it does. If you're only saving 20% of the bike price (income tax) and need to pay 7% at the end to keep the bike, you're only saving 13% of the bike, albeit with 12 months interest free payments. and the risk that if employment ends you need to clear the balance.

You can probably save more than 13% by shopping around unless you really want a specific make/model.

It makes more sense on a 40% tax income though, because you'd still be saving 33% of the bike price.

Nasqueron

Herzlos said:

Nasqueron said:

Herzlos said:

On the £12k job you're not going to save anything but get installments. On the £28k job you'd save 20% BUT you'll need to pay a 7% fee to buy the bike at the end. 4% if the spend is under £500, that won't get you a decent e-bike, but could get you safety gear, tools, lock etc. 

You're probably best trying to buy at a discount without the scheme, or go 2nd hand where you could be saving about 50%.

7% fee / extended loan still means a saving of 25% on the bike price

I don't think it does. If you're only saving 20% of the bike price (income tax) and need to pay 7% at the end to keep the bike, you're only saving 13% of the bike, albeit with 12 months interest free payments. and the risk that if employment ends you need to clear the balance.

You can probably save more than 13% by shopping around unless you really want a specific make/model.

It makes more sense on a 40% tax income though, because you'd still be saving 33% of the bike price.

lower rate taxpayer saves 33% - 7% fee = 25% when I did it, I see it's treated as 28% and 42% now so the normal range for C2W is 21-39% saving based on tax and the 3 vs 7% fee. You forgot to include NI in that number 

Not all C2W have the fee also

You can also shop around and use C2W - when I got my second one, Evans at the time were doing a deal with a trade-in of old bikes (for charity) which gave you accessories up to a certain value free - I think it was £75-£100 so I got a £1000 bike, saved 25% and got £100 or whatever or accessories.