Buying a Brompton under cycle 2 work...

[Twanger]

...which I am thinking of doing.

The problem is that the "fair market price" of a second hand brompton means that I could end up buying the damn thing twice!

Has anyone got away with this?

 

[jack the lad]

I'm buying a Brompton under c2w. I'm not exactly sure what you mean by 'fair market price'. If it is the final purchase payment, just agree it in advance. Mine is a nominal payment, like it is under HP agreements, I think it's £1.

 

[summerdays]

As far as I know they can't agree a payment in advance as it then becomes an employee loan (? or something else anyway) and not exempt from the tax benefits. I think normally most companies end up charging about 1 extra month for the bike to become yours.

 

[Twanger]

I'm buying a Brompton under c2w. I'm not exactly sure what you mean by 'fair market price'. If it is the final purchase payment, just agree it in advance. Mine is a nominal payment, like it is under HP agreements, I think it's £1.

Reading the blurb, it says that for the bike to be yours you have to pay a fair market price. Second hand Bromptons are like BMWs. They go for ludicrous amounts of money. I am posting here in the hope that someone will tell me that it is possible to convince the powers that be that a one year old second hand brompton can be bought on the open market for 50 quid or less.

 

[Twanger]

As far as I know they can't agree a payment in advance as it then becomes an employee loan (? or something else anyway) and not exempt from the tax benefits.

Yup. That's how I read it.

 

[fossyant]

It's about 5%

 

[2Loose]

Every organisation I have read about using Cyclescheme doesn't bother looking into a 'fair market price' at the end of the scheme, but rather uses the suggested 5% of purchase value figure at the end. In my mind this is a lot of depreciation in only a year, but it is in the riders favour and no-one loses out.

I know Cyclescheme is different from C2W, so I'd be interested to hear of anybodies experiences to the contrary?

 

[jack the lad]

This is what our scheme says

"At the end of that period, the employer can transfer ownership for a nominal fee which is currently set at 5% of the amount borrowed."

So it is agreed in advance, but a bit more than I thought it was.

There is no reason at all in law why agreeing a price in advance turns a hire agreement into a loan and, if my scheme can do it (and my employer is normally excessively cautious about tax issues) there is no reason why yours can't.

My employer uses 'cyclescheme', if that helps.

 

[gemsno4]

I know Cyclescheme is different from C2W, so I'd be interested to hear of anybodies experiences to the contrary?

We use C2W and it works that way - i.e. a %tage of the cost in month 13. Can't remember the percentage, but it doesn't matter what bike you have. I work for an accountancy firm so assume they have got it right

 

[jack the lad]

Remember also that 'a fair market price' can quite legitimately take into account that (a) you have paid an excessively high hire charge for the 12 month period - equivalent to the full cost of the bike to the employer, so it will have no written down book value to them at the end of the period;
( you have looked after and maintained the bike for that 12 month period at no cost to the employer;
(c) if you don't buy, it your employer will have to dispose of it and will incur costs in doing so.
So all in all it is 'fair ' to agree a nominal price and give your employer the certainty of a sale before they agree to hire a bike for you.

If you are being expected to pay full market price (as opposed to fair market price) you should pay a lot lower hire charge - but the tax benefit is on the hire charge, so you want that as high as possible and the purchase price as low as possible.

 

[Downward]

So it could be a good investment to sell on if never used ?

 

[TheDoctor]

Be a good investment to sell on even if it is!

 

[trsleigh]

When I got my Brompton on C2W the terms to buy it at the end of the hire period were £20 + vat or 3% whichever was greater. So my final payment to buy it was £32 . I could have refused to buy it, in which case it would have cost me £60 to have it taken away. Bit of a no brainer really.

 

[Twanger]

Thanks, that's what I needed to know.

 

[Bromptonaut]

Twanger,

Talk to your HR people. I have exactly the same issue, at present my employer's (Ministry of Justice) line is that I should get a valuation from a bike shop. Their service provider suggest the equivalent of a further month's payment but HR say this is generic advice and their rule is based on discussions with the revenue.

Intend to just keep using the bike and wait for someone to ask questions.