CTW - Worth looking at?

[gambatte]

Any quick answers?
I'd been thinking about doing it, the firms moving soon and a 15m round trip will be a 30 miler. I recently went into my LBS and spotted a CTW leaflet on the counter.
I asked the lad behind the counter "This worth doing anymore?"

Response...

"No, not really. Nowhere near as good as it used to be"

Now I know its not as good as it used to be... but is he otherwise right?

 

[BSRU]

It maybe not be as good as it used to be, before HMRC started to enforce the rules properly, but you still save some money and it's basically an interest free loan.
Without it I would have probably bought a bike for about £500 instead of being able to buy a bike for £1000.

 

[Joseph]

Answer basically is "it depends".

If you're a 40% (or 50%) tax payer, it's more worthwhile than if you're a 20% payer.

It varies between the schemes how good they are (eg. most bike shops will give you a better deal if you're paying cash/card vs paying with CTW).

It varies between companies exactly what their attitude is to the bikes at the end of the year, and how you feel about having a bike that you're paying for that technically belongs to the company.

If you would otherwise take out a loan to buy the bike, it's a better deal.

 

[exbfb]

Any deal that give you a very substantial discount is a great deal.
Whichever way you slice it.

My payments for the bike = a 42% discount on the bike.
My tax liability for getting the bike as a benefit in kind in year two adds 3.6 % back again.

Based on the above, I fail to see how it could ever be called a bad deal to get a discount of 38% on a new bike.
I don't ever imagine I could walk into a shop and get that sort of deal.

These figures are absolute and I have them in writing, they aren't guesswork and are based on an actual agreement which is in place.

 

[SportMonkey]

Any deal that give you a very substantial discount is a great deal.
Whichever way you slice it.

My payments for the bike = a 42% discount on the bike.
My tax liability for getting the bike as a benefit in kind in year two adds 3.6 % back again.

Based on the above, I fail to see how it could ever be called a bad deal to get a discount of 38% on a new bike.
I don't ever imagine I could walk into a shop and get that sort of deal.

These figures are absolute and I have them in writing, they aren't guesswork and are based on an actual agreement which is in place.

Actually your company is well within it's rights to charge you what they deem to be a fair appraisal of the value of the bike after the year/two of cycling. Remembering you are liable for the tax on the difference between the true worth and what you are sold it for. Most notably a company can deicde that because it's a bike, it doesn't depreciate more than 10% a year. You could end up paying 120% of the value. At my last company this was all run by our merciless accountants, who would shaft the employees.

 

[Norm]

Being the merciless accountant type who has set up and run a C2W scheme, I'd add that...

These figures are absolute and I have them in writing, they aren't guesswork and are based on an actual agreement which is in place.

... I hope that not everything is in writing, as agreeing a price before the end of the scheme makes it a hire purchase scheme, not a rental scheme, and therefore the whole thing could be disallowed by HMRC.

 

[SportMonkey]

Being the merciless accountant type who has set up and run a C2W scheme, I'd add that...

... I hope that not everything is in writing, as agreeing a price before the end of the scheme makes it a hire purchase scheme, not a rental scheme, and therefore the whole thing could be disallowed by HMRC.

Good point. It was well noted that the company were not allowed, by HMRC, to give a value for the bike before the end of the scheme.

 

[exbfb]

Ok, I take all of the above on board.

The wording of the agreement tells me that I have no right to expect to automatically purchase the bike at the end of the hire period.

Fair enough, no problem.

I also have a guidance not from the employer which states that their policy is to transfer ownership to the hirer at the end of the hire period and to use HMRC rules to apply the relevant personal income tax through the P11D process.

That's what their stated intention is, but as stated above, their is no automatic right for this to be the outcome.

Thanks for all posts clarifying the above.

 

[Norm]

The wording of the agreement tells me that I have no right to expect to automatically purchase the bike at the end of the hire period.

That little clause makes it all good.