SportMonkey
Guest
Why should an employer just write off the value though? Surely they'd want you to cover as much of the cost? I don't get the business logic to giving cyclists essentially a large bonus for no reason.
c2w scheme to start charging VAT
- Thread starter terry_gardener
- Start date
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gaz
Cycle Camera TV
- Location
- South Croydon
A £50 saving is something you could easily get by shopping online or talking to your LBS.bike radar said:
The employer pays £1k for the bike. You pay them back exactly £1k. The savings you make are on tax and NI that you pay to the government. These are not savings that your work are paying for. Your employers actually make large NI savings themselves by operating the scheme.
There is nothing dodgy about your company donating the cycles - I consider it fairly harsh to ever try to make a profit out of this kind of scheme. I work for the NHS using public funds. Everything has to be whiter than white.
wiggydiggy
Legendary Member
"from 1 January 2012"
Oh good, my company does all the C2W in january each year so thats me fubared.....
Think I'll start saving for the new bike now, but wait and see what my company says in the Sept/Oct marketing blitz we get from them around C2W.
It might still be worth it, cant really tell at this point
Oh good, my company does all the C2W in january each year so thats me fubared.....
Think I'll start saving for the new bike now, but wait and see what my company says in the Sept/Oct marketing blitz we get from them around C2W.
It might still be worth it, cant really tell at this point
Granted, if your employer insists on making a profit by claiming that you pay the full residual value then the savings will be minimal. This is also the case for a lot of the companies who operate the schemes as this final payment is where they make their profit.
Halfords are one example where the final payment is left up to your employer's discretion. Your company can also set up their own scheme - its very simple - in order to maximise the savings.
400bhp
Guru
400bhp
Guru
READ THE THREAD
The main problem here I think is that the market is saturated with numerous 'cycle to work' companies who aren't interested in saving cyclists' money, they're interested in exploiting a profit from a government tax break scheme.
The residual value changes from last year only become an issue when you are told that you have to pay them in full, when this isn't always the case. Obviously these scheme companies will write that into their contracts because this is where they make their profit, but the scheme wasn't created for companies to do this. If you want to maximise your savings you need to either sign up to a scheme where your employers own the bikes, not where the external companies own the bikes, so that when the hire term ends you have the option of your company selling you the cycle for nothing, or a reasonable charge plus the tax liability of the difference.
As I have previously said before, Halfords aren't interested in retaining the bikes as assets. They want sales and customers through the door. So the transfer of ownership is to your employer and the salary sacrifice and final payment can be controlled in-house. I'm sure that they can't be the only scheme that does this.
However there is no reason why your employer can't approach any LBS and purchase in bulk from them and handle their own debt recovery. It's not complicated or anything that a payroll department won't have done before.
It may require us as cyclists and employees to maybe make a few noises in the right directions, but the government scheme is there to help us and others be more economically aware and carbon efficient, so we shouldn't allow these companies to literally take away the benefits that we've rightfully been given.
The residual value changes from last year only become an issue when you are told that you have to pay them in full, when this isn't always the case. Obviously these scheme companies will write that into their contracts because this is where they make their profit, but the scheme wasn't created for companies to do this. If you want to maximise your savings you need to either sign up to a scheme where your employers own the bikes, not where the external companies own the bikes, so that when the hire term ends you have the option of your company selling you the cycle for nothing, or a reasonable charge plus the tax liability of the difference.
As I have previously said before, Halfords aren't interested in retaining the bikes as assets. They want sales and customers through the door. So the transfer of ownership is to your employer and the salary sacrifice and final payment can be controlled in-house. I'm sure that they can't be the only scheme that does this.
However there is no reason why your employer can't approach any LBS and purchase in bulk from them and handle their own debt recovery. It's not complicated or anything that a payroll department won't have done before.
It may require us as cyclists and employees to maybe make a few noises in the right directions, but the government scheme is there to help us and others be more economically aware and carbon efficient, so we shouldn't allow these companies to literally take away the benefits that we've rightfully been given.
400bhp
Guru
It's not just about cost, but also about employee relations and competition.
More companies are offering flexible benefits packages, so an additonal flexible benefit is reasonably easy to add on.
wiggydiggy
Legendary Member
But also as I stated earlier, the full cost is always recovered in the hire agreement process before any final payment is due. The residual value is an additional charge in addition to this, that would be a profit to the organisation or the company running the scheme.
So by waiving a final payment and letting the employee pay the lesser tax liability instead, the company are only losing out on profit. There is no way they would make a loss unless you were clocking up any scheme administration time, which would be minimal anyway.
the reluctant cyclist
Über Member
- Location
- Birmingham
I'm not sure my employers got this scheme right either.
I got my bike and they gave me a cheque to give to the bike shop - I can't remember how much it was for but lets say for arguments sake it was for £500.00.
Out of my salary monthly I paid them back the exact sum of £500.00 over a 12 month period.
I think that I made some saving on the bike but I'm not sure where - all I remember is that they paid a cheque for £500 and I paid them back £500
Then I wanted another bike on the same scheme (greedy I know) and they asked me for £50 plus VAT to "buy" my bike from them.
I couldn't work out why I had to pay them again when I had piad them the full amount that they paid for the bike?!
Then the bike got stolen and as they still "owned" it I enquired as to whether they could claim for it as I had been uninsured (a costly mistake not on purpose) and they said no they couldn't.
Then a few months later they asked me whether I wanted to "buy" the bike again - stolen on their premises under their security in their time - even though I didn't have it any more.
I said that I didn't want to as I had bought another bike now brand new - so they said "okay well we'll go ahead and do an insurance claim for us then" and they claimed for it and kept the money!!!
Somewhere in there I am sure there is a mistake on somebody's part - perhaps it's mine - but neither I, nor my employers seemed to understand the scheme at all and nobody wanted to get invovled in the first place!!!!
So for me, it's not an option!!!! : (
I got my bike and they gave me a cheque to give to the bike shop - I can't remember how much it was for but lets say for arguments sake it was for £500.00.
Out of my salary monthly I paid them back the exact sum of £500.00 over a 12 month period.
I think that I made some saving on the bike but I'm not sure where - all I remember is that they paid a cheque for £500 and I paid them back £500
Then I wanted another bike on the same scheme (greedy I know) and they asked me for £50 plus VAT to "buy" my bike from them.
I couldn't work out why I had to pay them again when I had piad them the full amount that they paid for the bike?!
Then the bike got stolen and as they still "owned" it I enquired as to whether they could claim for it as I had been uninsured (a costly mistake not on purpose) and they said no they couldn't.
Then a few months later they asked me whether I wanted to "buy" the bike again - stolen on their premises under their security in their time - even though I didn't have it any more.
I said that I didn't want to as I had bought another bike now brand new - so they said "okay well we'll go ahead and do an insurance claim for us then" and they claimed for it and kept the money!!!
Somewhere in there I am sure there is a mistake on somebody's part - perhaps it's mine - but neither I, nor my employers seemed to understand the scheme at all and nobody wanted to get invovled in the first place!!!!
So for me, it's not an option!!!! : (
400bhp
Guru
Little yellow Brompton
A dark destroyer of biscuits!
- Location
- Bridgend
But you both are only looking at the change from one perspective, that of the employee. From the employers side the scheme is now dead in the water. I sold the idea to the board by volunteering to do the admin, the amdin consisted of printing out some paperwork and telling the payroll dept how much to deduct for how long. Now with VAT input and output needing to be recorded, the no of people involved means that I can't justify the amount of work and time that the company will be paying for.
Hi Reluctant,
When you paid back the £500, they took that money from your gross salary. So when Income tax and NI was calculated each month your they would have taken less than they would have when your salary was £500 higher. If you're a standard rate 20% taxpayer then you'd have saved 20% with each payment and also approx 12% on NI payments.
The final payment (as it was before Aug '11) was just a nominal fee to transfer ownership from them to you. You would have still made a saving overall: £500-32%+£60 = £400.
Obviously the initial payments you make are 'hire' payments and you never actually own the bike until the transfer of ownership. So if anything happens during this time it's a risk. It's a good scheme if the ownership is transferred, but not so much if it isn't in this case.
