Cycle to work scheme

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roscco

Active Member
Hi, has anyone taken up this offer with the Governments cycle scheme? I have question im hoping someone can answer....

Ive done the calculation on the web site but what confuses me.....(which isnt hard..lol)

bike is £999

apply savings and it works out about £574.43

12 x hire purchase payments of £47.87

....... simple i thought.....

But reading into it, it states

" At the end of the hire period the owner of the bike may choose to offer the employee ownership of the bike for a full market value. "

Im confused, havnt you just paid for the bike with the £47.87 a month payment??

(sorry if i have missed something obvious, its been a long cold day cycling and im tired..lol)

Roscco
 

HJ

Cycling in Scotland
Location
Auld Reekie
HMRC insist that your employer should charge you the "full market value" of the second hand bike, other wise it is considered to be a payment in kind and you are liable to pay tax on the value of the "payment in kind", if that makes any sense... Maybe this web site can explain it better.
 

edwardd67

Senior Member
Location
Renfrew
Just got made redundant Christmas Eve, C2WS was due to finish April 2011.
My ex-employer billed me for the remainder of my contract.
Waived the final paymant as a "Payment in Kind"
Passed me on to HMRC where the Final market residual value of £150 will be recouped on my P11D.

The problem i have is they've moved the goal posts and changed my agreement .
I will be phoning HMRC on Monday.
 
OP
OP
roscco

roscco

Active Member
HMRC insist that your employer should charge you the "full market value" of the second hand bike, other wise it is considered to be a payment in kind and you are liable to pay tax on the value of the "payment in kind", if that makes any sense... Maybe this web site can explain it better.


Ahhhh, yes now makes sense, not as a hot deal as initaly thought, but would still save ....Just got to encourage my employer to take this up...believe it or not, i work within a civil service dept and they currently dont do CTW!
 

Norm

Guest

12 x hire purchase payments of £47.87
This is the mistake. A cycle to work scheme is not and cannot ever be a hire purchase scheme.

It is a rental scheme.

If there is any suggestion about purchase in the contract, any agreement on the final payment valuation or anything even close to that, it is not eligible for the tax reductions under the cycle to work scheme regulations.

The £47.87 (you can never be that precise, BTW, it depends on personal circumstances, tax codes, time of year etc) which you have calculated is a rental payment to your employer to let you use their bike - don't fall into the trap that many have been caught out by and think that it is your bike either.

Edward, be very careful before you call HMRC, know exactly what your scheme rules are and exactly what you are allowed, we've seen loads of peeps on here say stuff that, if they said it to HMRC, they'd lose all of their tax benefits and get their employers into a sack-load of trouble.
 

DTD

Veteran
Location
Manchester
Hello all. I’ve just got a bike through the cycle to work scheme. Took awhile to get my head around it, but thanks to a bit of patient explanation fromthe bike shop I think I’m sorted…

As I understand it, there have been some changes to the final payment, whichpotentially means it doesn’t seem the bargain it once was. However I was toldthat at the end of the 12 months I can opt to extend the rental for another 3years (you don’t actually have any further money deducted during this period).After this extension the bike is worth much, much less, so the final payment isquite small.

The other thing I had difficulty understanding was that the money forthe bike is deducted BEFORE tax, National Insurance etc was taken from wages,so I pay tax on a smaller amount of wages, so save extra on that.

I was surprised to find the civil service doesn’t take part in thescheme (my partner works for DWP).
 

edwardd67

Senior Member
Location
Renfrew
Edward, be very careful before you call HMRC, know exactly what your scheme rules are and exactly what you are allowed, we've seen loads of peeps on here say stuff that, if they said it to HMRC, they'd lose all of their tax benefits and get their employers into a sack-load of trouble.
My amount was £600 in total i paid back £510.64
Not much of a saving .
I'm now liable for tax on the residual value £150 as per HMRC guidelines on fair market value.
My scheme was based on a final payment based on 5% of the original amount. £30
After i signed up they rules were changed.

I did say it's an ex-employer :biggrin:
 

Norm

Guest
My scheme was based on a final payment based on 5% of the original amount. £30
After i signed up they rules were changed.
This is exactly what I mean about knowing the scheme requirements inside out, and this is exactly the pitfall I mentioned above.

If you tell HMRC that there was a scheme based on a final payment of whatever, the whole scheme is invalid and you'll be liable for the tax as well.

There can be no agreement on the final value, the rules have always been that the sale at the end of the scheme must be at fair market value and, if you try to take that to HMRC as an argument, you will most probably end up worse off than you are now.
 
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