Clarification on Cycle To Work and tax

[g00se]

Hi,

Just seen this.

It looks like the 'extended loan period' fix has been agreed on by all parties - where repayments to the employer stop after one year - but you are still 'loaned' the bike for a couple more years with no payments. Then at the end of that, you pay fair market which will be more like the original 5%.

Further, cyclescheme are formalizing this - where THEY will take ownership of the bike from your employer after 1 year and loan it to you for another 31 months. They will take a handling deposit of about 5% - - at the outset of when they take over ownership - and they will use this deposit as the fair market value at the end of the agreement.

So, company buys the bike, you pay from gross salary for 12 months - saving 40-50%. Then after one year, you pay 5% of original value to cyclescheme. As cyclescheme own the bike, it doesn't matter if you move company during the extended loan period.

I might email them to find out if - after the initial 12 months - I can get a second bike on cyclescheme - or if I have to wait until I take ownership in a few years.

 

[the snail]

Just listened to radio 4 moneybox feature
not on iPlayer yet
http://www.bbc.co.uk/programmes/b006qjnv

jist of it seems to be that hmrc are saying that the scheme should be a rental scheme, not a way of (especially for high-rate taxpayers) buying a bike cheap.

 

[her_welshness]

Yes just caught the tail end of this on Money Box. I would imagine that they would not allow people to go for a second bicycle on the scheme, but would be inetrested in finding that one out.

 

[bad boy]

You are allowed to re-join the scheme again after 12 months that's been confirmed !!

 

[Norm]

jist of it seems to be that hmrc are saying that the scheme should be a rental scheme, not a way of (especially for high-rate taxpayers) buying a bike cheap.

... "should be a rental scheme"? It IS a rental scheme, one of the basic requirements is that it is a hire not a hire purchase scheme.

Yes just caught the tail end of this on Money Box. I would imagine that they would not allow people to go for a second bicycle on the scheme, but would be inetrested in finding that one out.

You could check the guidelines on the HMRC or DfT site if you were that interested.

You can have two bikes, they are specifically allowed in case you need one at a station either end of a rail journey. However, without a consumer credit licence, the total value of the bikes and other included equipment must be under £1k.