Tax changes in cycle to work schemes?
Discussion
Has there been changes to these schemes recently? I've read that my cycle to work scheme now has a new "residual value tax" of 18% of the original price on a bike costing less than £500 and 25% on a bike over £500 added on at the end of the scheme?
Will these changes just be for new scheme vouchers or can they be applied to existing agreements? Is it correct that you can continue to rent the bike after the scheme has ended (with no more payments) resulting in a final value of zero after 4/5 years and thus no final payment(s)?
Will these changes just be for new scheme vouchers or can they be applied to existing agreements? Is it correct that you can continue to rent the bike after the scheme has ended (with no more payments) resulting in a final value of zero after 4/5 years and thus no final payment(s)?
el stovey said:
Will these changes just be for new scheme vouchers or can they be applied to existing agreements?
Both. There was a thread about this recentlyhttp://www.guardian.co.uk/lifeandstyle/2010/aug/13...
Jimboka said:
I purchased my last bike @5 percent plus vat when it ended in July. I have just started a new scheme & received a similar mail from my HR. Still a good deal for me anyway, pay about half the price interest free over 12 months then up to 25percent at the end...
Cheers.Did your scheme change before you accepted the new scheme or has it been applied in retrospect to a scheme you were already in?
Do you now pay the 'fair market value' of 5% plus an extra 25% of the value of a new bike? I.E after 12 months are you now having to pay 30% of the value of a new bike?
Ours has changed since it started in Jan of this year.
There is a sliding scale dependent on usage and condition yet it is possible to assess the condition yourself.
It goes from A to D, A being the least use, D being used most days for commuting and being left out over night.
I'm thinking most people in my company in the scheme will assess theirs as a D.
Even if its assessed an A the residual value payable at the end of 12 months will still only be something between 5 & 10% of the initial purchase price.
There is a sliding scale dependent on usage and condition yet it is possible to assess the condition yourself.
It goes from A to D, A being the least use, D being used most days for commuting and being left out over night.
I'm thinking most people in my company in the scheme will assess theirs as a D.
Even if its assessed an A the residual value payable at the end of 12 months will still only be something between 5 & 10% of the initial purchase price.
the new table is here,
http://www.wiggle.co.uk/h/option/cycletowork#16
Our work have just announced this years scheme, they only run it for one month - Applications in by 1st October you get your voucher 31st October, and somehow we have to pay £20+VAT or 3% + VAT which ever is the greater at the end of the 12 month scheme, somehow this seems to bypass the new rules above.
http://www.wiggle.co.uk/h/option/cycletowork#16
Our work have just announced this years scheme, they only run it for one month - Applications in by 1st October you get your voucher 31st October, and somehow we have to pay £20+VAT or 3% + VAT which ever is the greater at the end of the 12 month scheme, somehow this seems to bypass the new rules above.
Edited by NWMark on Thursday 2nd September 17:14
I have just signed up for a new bike through the scheme (Specialized Crux Elite). My understanding is that after 12 months you are liable to pay 25% of the original purchase price of the bike. However, the paperwork that I received (hire agreement) appears to have 'discounted' the original purchase price of the bike - which I assume is to account for the new tax position.
The bike that I selected retails for £999 (we have a limit of £1,000 to spend) and the monthly hire rate is circa £70 / month resulting in a total hire / repayment of £850 (before tax) plus the 25% at the end. So even with the 25% purchase price, the gross price is only £1,063. Taking the tax saving into account (40%) the bike will still only cost me circa £780 in total.
Not bad - particularly as this is interest free over the course of a year.
The bike I have selected will probably not be used for commuting as I work 70 miles from home but it will certainly see some use in the forthcoming cyclo-cross season!!!
The bike that I selected retails for £999 (we have a limit of £1,000 to spend) and the monthly hire rate is circa £70 / month resulting in a total hire / repayment of £850 (before tax) plus the 25% at the end. So even with the 25% purchase price, the gross price is only £1,063. Taking the tax saving into account (40%) the bike will still only cost me circa £780 in total.
Not bad - particularly as this is interest free over the course of a year.
The bike I have selected will probably not be used for commuting as I work 70 miles from home but it will certainly see some use in the forthcoming cyclo-cross season!!!
This reworking of the policy basically negates any potential savings of the C2W scheme, thus rendering the entire thing a waste of time. Might as well get a 0% deal at a bike shop, or just use a 0% credit card if you want to drip pay for one 
Thankfully my current C2W scheme is just about to finish and I was told I could buy the bike for what my employer consider it's current worth to be - £37
Got out just in time!
Thankfully my current C2W scheme is just about to finish and I was told I could buy the bike for what my employer consider it's current worth to be - £37
Got out just in time!Chicane-UK said:
This reworking of the policy basically negates any potential savings of the C2W scheme, thus rendering the entire thing a waste of time. Might as well get a 0% deal at a bike shop, or just use a 0% credit card if you want to drip pay for one
Thankfully my current C2W scheme is just about to finish and I was told I could buy the bike for what my employer consider it's current worth to be - £37 Got out just in time!
I don't agree - see my post above. Several big players have a lot of business tied up in these schemes. As a result their lawyers have been busy since the recent HMRC announcement, and their recommendation is what I posted.Thankfully my current C2W scheme is just about to finish and I was told I could buy the bike for what my employer consider it's current worth to be - £37
Got out just in time!You don't get to actually own the bike until you leave or say 6 yrs, whichever comes first, but you get all the benefits of ownership.
We're still going to launch a scheme early next year and expect plenty of uptake.
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