vickster
Squire
If the business has an FSA license or similar, I believe they can offer more. The 1k cap is for non licensed organisations
new bike - how much to spend
- Thread starter joanna
- Start date
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vickster
Squire
Not me, I'm a coward and terrified of the consequences. My knee is buggered coming off at 13mph, I can't countenance what might happen at 40Wait until you are doing 40 down hill , youll get on the drops and love it
That said, each to their own
mattobrien
Guru
- Location
- Sunny Suffolk
The £1k limit is about firms not having to have individual credit licences. If a company has it's own credit licence then they do not necessarily need to apply the £1k limit. I was shown the promotional paper work for this example and there was a £2.5k limit, seeing is believing and all that
So doing the maths;
List bike cost: £2500
Minus 40% of cost of bike in tax saving = -£1,000
Minus NI contribution saving, which for ease in this example I will say are 10% = -£250
Total saving = £1,250
Total cost of bike = £1,250
£1,250, spread over 12 months, just over £100 / month.
If you are not a higher rate tax payer the saving is less, but in this specific example said friend was.
SteCenturion
I am your Father
- Location
- The Dark Side of the Moon.
Didn't know that.The £1k limit is about firms not having to have individual credit licences. If a company has it's own credit licence then they do not necessarily need to apply the £1k limit. I was shown the promotional paper work for this example and there was a £2.5k limit, seeing is believing and all that
So doing the maths;
List bike cost: £2500
Minus 40% of cost of bike in tax saving = -£1,000
Minus NI contribution saving, which for ease in this example I will say are 10% = -£250
Total saving = £1,250
Total cost of bike = £1,250
£1,250, spread over 12 months, just over £100 / month.
If you are not a higher rate tax payer the saving is less, but in this specific example said friend was.
I had worked out N+1 for this spring summer £1k bike - roughly 25% Tax/N.I combined saving (lower rate earner).
This worked out at about £700 for the bike inc 5% discount on leisure lakes V.I.P scheme.
Glad you could clear it up for me.
Cheers.
Drop bars will take a little getting used to, and can feel twitchier to begin with because the bars are narrower. I ride on the hoods most of the time, use the tops if I'm climbing, and the drops for descending or into a headwind, or just to have a change of position.
I always use the drops for descending for a few reasons; you have more control there, your hands won't get bounced off the bars (which would not end well), and you can apply more braking power and with more control than you can from the hoods. Safest place to be when going down a twisty descent.
The £1k limit is about firms not having to have individual credit licences. If a company has it's own credit licence then they do not necessarily need to apply the £1k limit. I was shown the promotional paper work for this example and there was a £2.5k limit, seeing is believing and all that
So doing the maths;
List bike cost: £2500
Minus 40% of cost of bike in tax saving = -£1,000
Minus NI contribution saving, which for ease in this example I will say are 10% = -£250
Total saving = £1,250
Total cost of bike = £1,250
£1,250, spread over 12 months, just over £100 / month.
If you are not a higher rate tax payer the saving is less, but in this specific example said friend was.
The above doesn't make sense to me.
I used the CTW scheme back in 2012 and borrowed £600 to get my bike. I paid back £50 per month for the year, so paid my employer back the £600 I borrowed.
However the £50 was taken from my salary before tax, so in effect it was only costing me around £30 after tax and NI deductions on it. Your example, for my understanding of how it works is wrong as I would expect to pay back around £208 p/m
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mattobrien
Guru
- Location
- Sunny Suffolk
£208 / month works out at £2,496, so pretty much the cost of the bike and no saving.
Cycle to work schemes operate on a salary sacrifice scheme, where you don't get paid the money to cover the cost of a bike, across the period of a year. The cost to the individual isn't the amount they sacrifice as it is taxed and has NI applied. The cost to the individual is the drop in take home pay, which is the amount, less the tax and NI which would have been applied.
If you are paying 40% tax, then you don't pay the tax if you sacrifice the salary as you haven't earns the money. Equally you don't pay the NI on what you haven't earned.
In your example you got a £600 bike, which spread put to a sacrifice of £50 / month and you say the cost to you was around £30. £20 of £50 is 40% and doesn't include any NI savings.
Multiple the £600 bike by 4.17 gives you a £2,500 bike. Multiple the £30 a month by 4.17 give you a monthly payment of £125. Add in a NI saving of just over £20 a month brings it down to just over a £100 a month.
I hope that helps explain my original numbers
Not really, no.
The overall end payment after the Government has taken their "cut" may well be around £125 , however the deduction from your salary will be over £200. Saying it will only cost you over just £100 p/m is a little misleading imo.
£208 / month works out at £2,496, so pretty much the cost of the bike and no saving.
Cycle to work schemes operate on a salary sacrifice scheme, where you don't get paid the money to cover the cost of a bike, across the period of a year. The cost to the individual isn't the amount they sacrifice as it is taxed and has NI applied. The cost to the individual is the drop in take home pay, which is the amount, less the tax and NI which would have been applied.
If you are paying 40% tax, then you don't pay the tax if you sacrifice the salary as you haven't earns the money. Equally you don't pay the NI on what you haven't earned.
In your example you got a £600 bike, which spread put to a sacrifice of £50 / month and you say the cost to you was around £30. £20 of £50 is 40% and doesn't include any NI savings.
Multiple the £600 bike by 4.17 gives you a £2,500 bike. Multiple the £30 a month by 4.17 give you a monthly payment of £125. Add in a NI saving of just over £20 a month brings it down to just over a £100 a month.
I hope that helps explain my original numbers
The overall end payment after the Government has taken their "cut" may well be around £125 , however the deduction from your salary will be over £200. Saying it will only cost you over just £100 p/m is a little misleading imo.
mattobrien
Guru
- Location
- Sunny Suffolk
It will cost you just over a hundred pounds. You don't see what the government takes and it doesn't cost you the tax, does it.
Your pre tax pay packet may go down by £200, but you take home pay will not. Therefore the cost to you on a personal cash you receive kind of way, rather than a written down figure that you never see, is just over hundred pounds.
It I get a £10 grand pay rise and am on 40% tax, I don't get an extra £10k in my pocket, I get £6k extra take home after tax (excluding NI), thefore the actual benefit to me is £6k, not £10k. It does cost the employer £10k though and the taxman is grateful for an extra £4k.
SteCenturion
I am your Father
- Location
- The Dark Side of the Moon.
@mattobrien & @Sweeney.
Come on guys - Neither of you are wrong - just viewing this from polar ends of the spectrum.
I initially replied with the question - "don't understand how" & was a little confused myself.
As I wish to buy on C2W myself soonish I thought I would ask to see if I could get by the limit etc.
Yes - as I see it, my company would deduct £100 p/m from pay if I were able to buy a £1200 bike.
Yes also - the effect on my take home pay would not be minus £100 - but £100 minus the Tax/N.I contributions I would have paid.
The tax & n.i is avoided as the £100 (for ease) is taken before the Government get Wicked with my Wonga.
So guys - lets agree we view it differently but with the same outcome
