Cycle to Work - Maximum

[Norm]

Can I check this with you? I thought on my previous bike I pad back, over 12 installments, the cost of the bike ex VAT as my employer (a publc authority) can rclaim VAT

Thanks for the other comments.

You are on one of the more friendly schemes, then.

The rules can be interpreted like that, although they suggest elsewhere that it should be the gross value, I don't think that it has ever been tested in court either way.

I think that most schemes work on the gross, as the schemes are set up by the employers so they'll lose twice over if HMRC do get pedantic and rule the repayments should be based on the gross value.

Say thanks to your scheme administrators when you see them next, Killie.

 

[doogle84]

That's a good summary.

Thanks for all the help. However, if the summary above is on the button, given I've not got time to weigh up the pros and cons I may take the easy option and find something for sub 1k.

I've just got back off holiday and discovered I have only 10 days to finalise the purchase details - this is part of our annual "flexible benefits" process limited to a very inflexible 3 week "nomination period"!

I think I'll be starting off a new thread to track down a sub 1k Fratello substitute from a Cyclescheme retailer...

 

[BenScoobert]

I hate to awaken an old thread, but starting a new one just creates another.
My c2w scheme is at an end, I have a letter from a company called LHE Professions (not my employer) stating they will take the hmrc recommended value if I don't respond within a few days. ie £250 of my original £1000 bike

However my scheme started before this new pricing change and my contract says:
What happens when I have finished the payments?
You may be able to start a new scheme with a more up to date bicycle, if your employer wishes to implement a new
scheme.
• The bicycle and equipment can be returned or collected for a small collection fee.
• Your employer may have the opportunity to sell the bicycle and equipment at the end of the scheme at fair market
value. Currently fair market value is estimated to be a nominal sum not exceeding the amount
of one month’s salary sacrifice.

Any ideas where I stand on this?
I don't see how they can take more than 1 month's payment as I have a contract.

 

[Altus]

I think you are still liable for the final valuation fee as it only says that the value is estimated. However other cycle to work providers have been giving people the option to extend their scheme by another 3 years reducing the liability. Contact LHE and see if they also offer this option. Should reduce the amount payable to 7% if they do.

"Your employer may have the opportunity to sell the bicycle and equipment at the end of the scheme at fair market
value. Currently fair market value is estimated to be a nominal sum not exceeding the amount
of one month’s salary sacrifice."

Employers weren't permitted to give a set value of your bike at the end of the term.

 

[lejogger]

I hate to awaken an old thread, but starting a new one just creates another.
My c2w scheme is at an end, I have a letter from a company called LHE Professions (not my employer) stating they will take the hmrc recommended value if I don't respond within a few days. ie £250 of my original £1000 bike

However my scheme started before this new pricing change and my contract says:
What happens when I have finished the payments?
You may be able to start a new scheme with a more up to date bicycle, if your employer wishes to implement a new
scheme.
• The bicycle and equipment can be returned or collected for a small collection fee.
• Your employer may have the opportunity to sell the bicycle and equipment at the end of the scheme at fair market
value. Currently fair market value is estimated to be a nominal sum not exceeding the amount
of one month’s salary sacrifice.

Any ideas where I stand on this?
I don't see how they can take more than 1 month's payment as I have a contract.

The problem you have is that the rules changed with regards to what a fair market value is, and it applied to all existing schemes, not just the ones starting up after the change.
Most companies have found ways around this however either by extending the hire period, or letting you pay tax on the difference between the HMRC market valuation and what you actually pay to take ownership.
What other options have LHE Professions given you apart from to pay the FMV?

 

[lejogger]

I hate to awaken an old thread, but starting a new one just creates another.
...LHE Professions...

Just had a look at their website... the only options they seem to give are to return the bike or pay full FMV. I'm sure they're not the only ones doing this, but most of the bigger companies running the scheme have at least made an effort to change the way the scheme works to maximise the savings to the employee.
If that is the case, then you may be tied in to paying (if you want to keep the bike) - unless you can prove that the value of the bike is less than what they're asking. I hope I'm wrong.

Yet another example of why the scheme should NOT be outsourced to these small profit-making companies, whose only interest is maximising their profit from the savings we're entitled to.

 

[BenScoobert]

It seems they are in for a fight, this has thorough pi$$ed off a decent chunk of our work force. Looking at my original contract which is between my employer and myself with wheelies direct cycle solutions ltd as the 3rd party bike provider, there is no mention of this LHE professions outfit and as far as I can see I have no contract with them.
Seeking legal advice tomorrow morning via the union. Time to be a militant train driver type I think.

 

[Norm]

Time to be a militant train driver type I think.

It was probably legally ok for the employer to sell the bike to LHE Professions but morally, that's pretty poor.

I see LHE Professions are linked to Close Brothers... good luck with that!

I also see that LHE Professions say that they offer a "Rolls Royce" service. I wonder what Rolls Royce would think of being linked like that. If you also wonder what Rolls Royce would think of being linked like that, you could let Rolls Royce know through their contact form.

 

[400bhp]

It was probably legally ok for the employer to sell the bike to LHE Professions but morally, that's pretty poor.

The employer should have at least told their employees they were doing this. Very poor employee relations.

My employer has "sold" our scheme to Evans cycles, where the original vouchers (not the scheme) were from.

 

[wiggydiggy]

<SNIP>

I'm not the expert on this type of C2W scheme (lesson learnt Norm!) but.....

Was it not a condition of the tax changes introduced that they could not be backdated? E.g. if your scheme was already running the 'old' tax rules would apply?

 

[400bhp]

I'm not the expert on this type of C2W scheme (lesson learnt Norm!) but.....

Was it not a condition of the tax changes introduced that they could not be backdated? E.g. if your scheme was already running the 'old' tax rules would apply?

No

 

[wiggydiggy]

No

Thats a real shame, is there not some sort of legal comeback on that ie your contract has been changed after you sighned it?

 

[Norm]

I'm not the expert on this type of C2W scheme (lesson learnt Norm!) but.....

Who is? It seems that even HMRC and DfT have argued about it in the past.

Was it not a condition of the tax changes introduced that they could not be backdated? E.g. if your scheme was already running the 'old' tax rules would apply?

I think (from memory) that related only to the clarification about the VAT treatment. It has always been a condition of the scheme that you cannot fix the selling price at the start of the scheme as that turns it from a hire scheme to a hire purchase scheme, and that would be specifically excluded under the rules.

The issue is all about the contract which hasn't changed. The contract says, as Altus pointed out, "Currently fair market value is estimated ". It could be argued that, because it is a requirement of the scheme that the bikes are sold at "fair market value", that even the 25% which HMRC recommend isn't fair market value - how many bikes which cost £1000 a year ago are selling now in good condition at £250?

 

[wiggydiggy]

Who is? It seems that even HMRC and DfT have argued about it in the past.

I think (from memory) that related only to the clarification about the VAT treatment. It has always been a condition of the scheme that you cannot fix the selling price at the start of the scheme as that turns it from a hire scheme to a hire purchase scheme, and that would be specifically excluded under the rules.

The issue is all about the contract which hasn't changed. The contract says, as Altus pointed out, "Currently fair market value is estimated ". It could be argued that, because it is a requirement of the scheme that the bikes are sold at "fair market value", that even the 25% which HMRC recommend isn't fair market value - how many bikes which cost £1000 a year ago are selling now in good condition at £250?

No worries cheers

Where does that leave BenScoobus then?

If it was me I'd pay the £250, keep the bike and not take up another C2W scheme through this company? Reason being its still a saving(ish) on the £1000 cost and it seems silly to give the bike back after paying all that £££ for it already?

 

[Soltydog]

I'm in same boat as BenS Our company keeps the reclaimed VAT, so our only savings are tax & NI, approx 32% saving. The bike value could now be 21% + VAT, making a massive 7% saving in total, whilst the company has made 33.8% & then whatever slice of the final value they take = Greedy bar stewards We have to make a decision on whether to keep the bike or not by 14th March, but as of yet we do not know what we have to pay???? How can you make a decision without all the facts?