c2w scheme to start charging VAT

[terry_gardener]

i have just noticed this on the bikeradar website

looks as though the c2w will start to charge VAT on the bike.

http://www.bikeradar.com/news/article/vat-to-be-charged-on-cycle-to-work-bikes-31162

 

[gaz]

Just seen this on bike biz. It will be interesting to see at which point you are charged vat, either way it's not looking for the C2W scheme.

 

[Soltydog]

As I understand it, the company buys the bike & leases it to you, if the company is VAT registered, they can claim it back & then it's up to them if they pass the VAT saving on to employees. So not sure how thay can stop companies claiming the VAT back ?
My employer does not pass the VAT saving on so basically I just save NI & IT on my bike.
Still a good deal, although it depends how they deal with the final payment this time round. 1st time there was no final payment subsequent schemes have had 1 months payment + VAT to buy the bike, so hopefuly this will continue.

 

[Little yellow Brompton]

Just seen this on bike biz. It will be interesting to see at which point you are charged vat, either way it's not looking for the C2W scheme.

I'm the admin for our scheme in work, I'll talk to the Finance Director tomorrow but I would imagine we will be closing the scheme. It will be too much hassle now to bother with. :-(

 

[gaz]

I'm the admin for our scheme in work, I'll talk to the Finance Director tomorrow but I would imagine we will be closing the scheme. It will be too much hassle now to bother with. :-(

Let us know. It will be intresting to hear.

 

[Little yellow Brompton]

Let us know. It will be intresting to hear.

Not much to hear or wait for, unless the FD has any objections ( and he won't) I will be closing the scheme. Up until now it's been nice and easy, company claim VAT back, divide what's left by X subtract from wages each month/week times X.

If VAT becomes involved it will need to be shown somewhere, that means it has to feed into the accounts , VAT invoices to each employee, reported , payslips altered, it's just not worth the overhead.

 

[gambatte]

TBH,
I'm looking at those figures. I've been considering C2W. Works moving, so the commute'll be 14 each way, rather than 7. I'd seen a couple of roady triples, like the Specialized Allez 24, which I figured at £600... wait a few months I might be able to find one closer to £500.

If those figures are right....sod it

Against a £40 saving, I'd rather have the bike 100% mine from day one. Never know I might even be able to barter a £40 saving I wouldn't have got through C2W.

 

[gb155]

Urgh

Not good, but will this affect NEW vouchers fron Janury 2012, or will it also affect me, who will be submitting my voucher in a few week, thus still having 6 moths left to pay ?

 

[Norm]

What does your rental contact say?

 

[lejogger]

Working for the NHS, we've never been able to recover VAT on the cost of the cycles, but subscribers to the scheme can still make significant savings through a reduction in their income tax and NI.
I suppose it's a big chunk of saving lost if that's what you're used to, but I guess we'll not miss what we've never had.

It's really important to remember that we're still talking of approximate savings between 30-50% so don't rush to scrap your schemes - we get 50 people a year signing up. EDIT - in my small part of the NHS, not the NHS as a whole

 

[Norm]

Working for the NHS, we've never been able to recover VAT on the cost of the cycles, but subscribers to the scheme can still make significant savings through a reduction in their income tax and NI.
I suppose it's a big chunk of saving lost if that's what you're used to, but I guess we'll not miss what we've never had.

It's really important to remember that we're still talking of approximate savings between 30-50% so don't rush to scrap your schemes - we get 50 people a year signing up.

+1

I'm just seeing this as more misinformation and misunderstanding about the scheme which, for many people, will not be any different to the scheme that it was last week.

 

[lejogger]

I'd say that it is pretty much dead in the water. Even if my employer finally got round to signing up, which remains unlikely, I don't think that I would bother. Buy bike at full price with little to no prospect of getting a discount. Price capped at £1,000. Compulsory insurance cover to their choosing, which would probably equate to the saving. Pay the full price of the bike over a year and then pay for it again as second hand. Save a bit of income tax. Pay some more VAT.

What's to like?

I would sympathise if that was the only choice of scheme you had available, so you should stress to your employer to shop around or even manage their own.

Quick and dirty calculation for a £1k bike on a sympathetic scheme:
12 monthly repayments of £83.33 minus 20% Income tax and 12% NI would work out at total amount paid of £680.
You would then pay tax on a benefit in kind of £250 which at 20% would be £50 over 12 months.

So all in you pay £680 for a £1k bike in manageable chunks throughout the year and a further £50 over the following 12 months. And this is the WORST case. Higher rate tax payers will obviously save more.

EDIT - presuming your employer chose to give you the opportunity to take ownership of the bike - important to stress this despite the few occurences of this opportunity not being given

 

[400bhp]

+1 Norm

It's likely to mean a smaller "profit" to employers that won't get passed on to the employee, but we shall have to wait and see.

I get a 10% "discount" off my voucher. In reality this is implicity 50% of the VAT saving.

 

[400bhp]

I would sympathise if that was the only choice of scheme you had available, so you should stress to your employer to shop around or even manage their own.

Quick and dirty calculation for a £1k bike on a sympathetic scheme:
12 monthly repayments of £83.33 minus 20% Income tax and 12% NI would work out at total amount paid of £680.
You would then pay tax on a benefit in kind of £250 which at 20% would be £50 over 12 months.

So all in you pay £680 for a £1k bike in manageable chunks throughout the year and a further £50 over the following 12 months. And this is the WORST case. Higher rate tax payers will obviously save more.

EDIT - presuming your employer chose to give you the opportunity to take ownership of the bike - important to stress this despite the few occurences of this opportunity not being given

I think that's incorrect.

You still pay the £250.

You can ignore the b.i.k in your calc as it cancels out on both sides, so you get £680 + £250 = £930

 

[lejogger]

I think that's incorrect.

You still pay the £250.

You can ignore the b.i.k in your calc as it cancels out on both sides, so you get £680 + £250 = £930

I manage our scheme and this is how ours works - so good news if you can get your employers to operate in this way.
The employer has to give the bike to you as a B.I.K which therefore means you have to pay the £50 tax. If you paid the full residual value of £250 then obviously the tax isn't required.

It's a way around the large final payment.