Cycle2work new £2,000 limit

[Scotmitchy]

I have just had my first monthly bill in, and, to be honest, the tax break is minimal. Having thought I might save up to 40 per cent, I think it might be nearer 10 per cent

 

[monkeypony]

What's all this about borrowing money? As I understood it the employer buys the bike in full. Claims the vat back and hires the bike to the employee. The bike remains the property of the employer and may sell it on the the employee at the end of the agreement. Bugger all to do with borrowing money as far as I'm aware.

 

[DrSquirrel]

Technically you (employee) are borrowing money from your employer... hence why employers need consumer credit licences to lend to individuals over a certain amount.

What you are refering to is almost a Hire Purchase scheme (which c2w should not be confused with, or intended as in selling the bike at the end) - even they are "loans" where the initial purchase is kept as property of the person you are paying to as security etc.

I didn't say that you had made a mistake. I was adding to your contribution, not correcting it.

Sorry if I came agross that strong.

Intresting. Our org are looking to bin cyclescheme maybe by the time the new company come on board our limit will be £2k over 3 years too

Unless you have the consumer credit it won't be above £1k, if you do why not more than £2k

Do you know if your company is "going it alone" or using another 3rd party? You should get better deals at shops going direct without the 10% commision cyclescheme takes.

I have just had my first monthly bill in, and, to be honest, the tax break is minimal. Having thought I might save up to 40 per cent, I think it might be nearer 10 per cent

Are you sure you calculated it properly?

Various things can affect this and its best to calculate it overall - also your first (or last) "bills" might be different to the rest.

If you are paying PAYE and NI you should easily be getting 25%

 

[adscrim]

This residual value lark....

If you have bought a bike say for £1k, but remove VAT, tax etc you are paying only £500 which across 12 months is £42 per month how does the residual value work - surely you have paid the whole lot off )albeit with some hefty tax savings)?

Is the residual value only for those people who aren't paying the full £500?

In order to comply with the scheme, for you to take ownership of the bike at the end of the hire period you need to buy it from the current owner, most probably your employer. If the value paid for the bike is deemed to be less than the market value, then tax is payable on the difference. The problem is that some scheme operators have read this HMRC guidance to mean the employee must pay the full market value as outline by the HMRC valuation matrix ie 25% for year old bikes where the original value was greater than £500.

In actual fact, HMRC have said the bike can be transferred at any price, given the tax payable is correct. So you could pay £5 for a £1k bike and providing you pay tax and NI on the difference between that and the £250 HMRC valuation, about £80, you are within the tax rules.

From HMRC website - In either case, as long as any payment that the employee makes for the cycle is equal to or more than the market value, there will be no tax charge under the employment income rules. If the employee pays less than market value, the difference will be taxable as employment income.

 

[taxing]

Is it just me who thinks that this is a bit much? A £1k bike will get you to work just as well as a £2k one (my £250 bike does the job), so why should you get a tax break on that extra £1k which is funding a luxury purchase?

I realise that I'm saying this to the wrong people.

 

[Norm]

Is it just me who thinks that this is a bit much? A £1k bike will get you to work just as well as a £2k one (my £250 bike does the job), so why should you get a tax break on that extra £1k which is funding a luxury purchase?

I realise that I'm saying this to the wrong people.

Would a £2k bike get you to work better than a £1k bike? I think it probably would, although not twice as well but the law of diminishing returns sets in at around £200-£300 (IMO) for road bikes.

I don't think that you are saying it to the wrong people. There has been much discussion hereabouts, even with the £1k limit, about whether the tax break is justifiable at that level.

I spent £650 on the bike and £350 on bits (mostly lights), and I felt I could justify buying a half-decent bike because I was facing a 42 mile round trip. I was looking at spending that sort of money on a bike anyway, as my employers didn't have a C2W scheme when I started looking. I didn't move up a bracket because of the C2W scheme, although I might have done if there wasn't the £1k limit.

There would be comments or complaints, whatever the level of expenditure - a friend of mine happily rides the few miles that she needs to cover on a bike which cost £30 second hand.

 

[GrumpyGregry]

that is a lot of money for a bike to ride to work on

oh yeah

Come come Tynan. If all the bikes bought on the scheme were actually ridden to work, why every morning rush hour would look like a Critical Mass.

 

[adscrim]

We completed our first roll out of C2W in June this year. Since then (and for our small office only), one chap rides his once a week. One chap-ess has used hers to cycle to work once. The two others have never been seen.

 

[Browser]

Do you work with Tim?

Not to the best of my knowledge.

Or in the same industry?

I don't know which industry he works in, does it have a bearing on this thread?

Or for an employer that has a consumer credit licence?

How would i find out?

If not, I strongly suggest you actually read the thread before we have any more misinformation spread.

I read the part which said "We have just had details of our new cycle2work scheme for 2011 published", emphasis on the "WE" and "OUR", so was aware he was referring to the company he is employed by.
I then went on to indulge in some vicarious wishful thinking on behalf of deckertim and also hypothesising about what I'd be tempted to do given a chance to access a scheme with the boundaries suggested.
Hope this clarifies matters m'lud