C2W for the self-employed - what's allowable

[HLaB]

I don't know the details but I think my brother a self employed joiner set a C2W scheme up.

 

[wilkotom]

So how do you want to resolve that then?

Well, you don't. That's where the value-add in Value Added Tax comes from. But if you want to be able to compete, you need to absorb the cost somewhere.

Consider 2 businesses, one VAT-registered, the other not. They both quote £500 parts and labour (I'll assume split 50/50 to make things easier)

Non-registered:

Parts: £208.33 + VAT = £250
Labour: £250
Total: £500

Registered:

Parts: £208.33 (input VAT reclaimed)
Labour: £250
Total: £408.33 plus 20% VAT = £550

The VAT-registered company would need to drop his labour charge to £208.33 to match the non-VAT one.

 

[KneesUp]

And in return the VAT registered business gets to reclaim the VAT on the input side which the non VAT registered doesn't.

As others have said, if you are making a profit (i.e. are a viable business) then of course the VAT on your inputs is less than the VAT on your output. I actually had another business set up a few doors away that was selling things at a price I could not match as I was VAT registered. Funnily enough after about 8 months he went away - I guess because he hit threshold. Those 8 months nearly killed my business though.

 

[KneesUp]

Once again, how do you feel it could be resolved?

I'm asking what the allowances are for self employed people with regard to bikes. I think re-defining the tax system is beyond my remit at the moment as I'm also making dinner and looking after a 4 year old!

 

[KneesUp]

I would say though that VAT was supposed to be a temporary measure when it was introduced, I think.

 

[wilkotom]

I understand how the arithmetic works. I was interested to know how you felt this might be best resolved.

Sorry, misunderstood

I don't have a good solution to this - my days of self-employment are long behind me. I would have thought a progressive introduction of such a tax (such as how Income tax is administered) might make sense to allow small businesses to scale up without hitting such a cliff, say allow businesses between 60 and 100k to reclaim a % of the difference, much in the way Child Benefit is phased out for high earners.

 

[KneesUp]

I don't know the details but I think my brother a self employed joiner set a C2W scheme up.

You definitely cannot to C2W if you are self-employed

http://www.cyclescheme.co.uk/employ...employers/about-the-scheme/how-to-get-started

 

[HLaB]

You definitely cannot to C2W if you are self-employed

http://www.cyclescheme.co.uk/employ...employers/about-the-scheme/how-to-get-started

It can't have been C2W then.

 

[KneesUp]

It can't have been C2W then.

But there must be something you can do - hence my thread

It's a shame asking what the allowances are seems to make people think I'm as bad as Amazon, Vodafone or Starbucks!

 

[User6179]

But there must be something you can do - hence my thread

It's a shame asking what the allowances are seems to make people think I'm as bad as Amazon, Vodafone or Starbucks!

Can you claim for a car ? , if the answer is no then you cant claim for a bike.

 

[KneesUp]

Can you claim for a car ? , if the answer is no then you cant claim for a bike.

I claim mileage for my car when I go to the post office, stationery shop, bank, trade shows etc.

I thought there was a scheme for bikes that offered tax breaks for commuters to encourage people to use them. Obviously I was mistaken.

 

[Flying Dodo]

I claim mileage for my car when I go to the post office, stationery shop, bank, trade shows etc.

I thought there was a scheme for bikes that offered tax breaks for commuters to encourage people to use them. Obviously I was mistaken.

As stated above, the Cycle to Work scheme is only applicable for employees. However, as you're self employed, if you buy a bike for business purposes, and assuming it's genuinely used that way, then you'd be able to claim that as a capital expense and 20p per mile for any business trips undertaken.

 

[KneesUp]

As stated above, the Cycle to Work scheme is only applicable for employees. However, as you're self employed, if you buy a bike for business purposes, and assuming it's genuinely used that way, then you'd be able to claim that as a capital expense and 20p per mile for any business trips undertaken.

Is that "mainly" used for work as per the C2W do you know? Or exclusively?

 

[KneesUp]

Then you could similarly claim mileage using a bike that way.

There isn't really a scheme that offers a tax break to commuters. There is legislation that says that an employer lending a bike to an employee doesn't constitute a taxable benefit.

That legislation effectively means employees can get a bike cheaper than list though.

I'm just trying to find a way that can be done if you're self-employed. I can't really lend a bike to myself.

 

[Markymark]

Buy it and put it down as a business expense against profits. The businesss will own it but you may just need to justify its business use should there ever be an inspection.