The Death of Cycle to Work?

[MacB]

I can't help but feel that your ire is misplaced, Tynan.

If the government sets up a legitimate way to reduce the cost of getting into cycling but some employers don't have a scheme, then I don't think the target should be those who have benefited.

Perhaps the ire isn't balanced correctly but it isn't helped by reading forum posts from some of the beneficiaries. You can draw parallels with things like MPs expenses. Yes people are acting within the rules, but also outside the spirit of the thing. Yes the scheme could have been better thought out and implemented. But people are still looking at it and making a conscious decision to avail themselves of a benefit for purposes it wasn't intended.

Tynan's just arguing for a bit more personal responsibility and I can see that argument. We can't just blame big brother or government.

 

[summerdays]

But equally think of the number of people who have joined this site asking about buying a bike as their company has a Bike to Work scheme, some probably not all have gone on to commute by bike... I know of several for whom it was the push ... including my next door neighbour who I never see walk anywhere other than to the garage has become a fair weather commuter.

Mr Summerdays bought his bike through the scheme not intending to use it other than a handful of times to commute... then he started and cycled through the summer becoming a 5x a week cycle commuter ... then he decided to keep going into the winter until the weather turned too cold/wet. That was a couple of years ago and he has cycled almost every single day, even through the snow - that's one commuting car off the road.

To be honest for me as long as they ride a bike and it changed their attitude to cyclists on the road that would be a positive outcome of the scheme IMO.

 

[John the Monkey]

As this is not the P&L, I shalln't let this degenerate into a rant, but will sum up by saying this shambles of a scheme is very much reflective of the previous party in charge: taking the lazy way out, neglecting those they claim to represent, and providing yet another unessential nicety for the well off. Enjoy the scheme whilst it lasts, is sounded like a good little earner.

I got a Brompton on our scheme, a bike I could never have afforded otherwise.

I ride a full size bike most of the year, but on the days where I have to go between sites, or work late, or can't ride the full distance I would normally I take the Brompton.

It isn't *always* used for commuting, but I reckon the split is 80/20 in favour of journeys to work as opposed to leisure[1] journeys. It turns 40-50 minutes of walking (from home to train station, from station to work) into a pleasant 15-20 minute ride. The chap a couple of offices over from me got one on C2W too, his is used year round & he doesn't drive into Manchester anymore.

[1] By which I mean pottering down to the shops &c, it really is a very handy little bike.

I'm sure there are tales of people buying crabon fibre wunderbikes on C2W. Equally well there are any number of tales of people getting their first "proper" bike, being introduced to the joys of their local bike shop, being able to afford something more than some heavy, misery inducing BSO for the first time, &c &c.

 

[gb155]

Sorry, Can someone give me a summery of what is actually happening to the C2W scheme please ?

 

[Norm]

In theory, nothing.

It appears that HMR&C have put it about that they are going to get tighter on the price paid if an employee buys a bike at the end of the rental period. The regs have always said that the sale needs to be at market price but this has largely been ignored with most paying a nominal sum (one month's rental or 5% of the purchase price have both been quoted). If the sale is at less than the market valuation, the difference is a taxable benefit, as it always has been.

 

[gb155]

In theory, nothing.

It appears that HMR&C have put it about that they are going to get tighter on the price paid if an employee buys a bike at the end of the rental period. The regs have always said that the sale needs to be at market price but this has largely been ignored with most paying a nominal sum (one month's rental or 5% of the purchase price have both been quoted). If the sale is at less than the market valuation, the difference is a taxable benefit, as it always has been.

Hummmm so in theory if you buy a £800 bike, fair value would be £550 ish so would £550 be payble ontop of the monthly rental payments or will they be taken into account ?

 

[GrumpyGregry]

Norm; what are the precise rules re use; my recollection is the bike has to be used at least 50% of the time for commuting yes? Don't think it says how that is measured, time on saddle, mileage, whatever. Meaning if someone gets a bike and rides it twice in the year so long as one of those rides is to work they comply.

It isn't just those people who buy bikes who benefit, plenty of bikeshops sell bikes that otherwise wouldn't go out the door... I heard a rumour that half of condors sales are on the scheme and they allow topup payments for bikes more than £1k!

 

[Jezston]

Norm:

Thanks again for all the clarification you've given on this thread, however I am still quite confused as it all seems very contradictory to what I've read and been told by the organisations running the schemes and from my employers!

If you do get a chance some time, I think it would be great if you could write a little guide for us, in laymans terms and also verbose enough to be shown to employers, as to how such schemes SHOULD work.

Might be worth a new thread?

Ta!

 

[Norm]

Hummmm so in theory if you buy a £800 bike, fair value would be £550 ish so would £550 be payble ontop of the monthly rental payments or will they be taken into account ?

That's pretty much the point of this thread. The scheme's have been set up under the misunderstanding that the final payment can be nominal. Because so many people and schemes have broadcast that they only charge a nominal amount, HMR&C have now said (apparently, I still haven't seen anything direct from HMR&C) that they are going to enforce the sale prices and are looking to get third party valuations as evidence of the market rates.

The rental payments cannot be taken into account, though, or they would not be rental payments. If your employer was to give you back some of the salary you had sacrificed, that salary would no longer have been sacrificed and it would become taxable.

Norm; what are the precise rules re use; my recollection is the bike has to be used at least 50% of the time for commuting yes? Don't think it says how that is measured, time on saddle, mileage, whatever. Meaning if someone gets a bike and rides it twice in the year so long as one of those rides is to work they comply.

Yes, that's pretty much my understanding. "Most" (which it says means over 50%) of the "use" (doesn't specify whether that is by journey, by mileage or by time) must be in qualifying journeys.

From the guidelines:

The exemption removes the tax charge that would otherwise apply to cycles and cyclists’ safety equipment loaned to employees provided the following conditions are met:
● Ownership of the equipment is not transferred to the employee during the loan period;
● Employees use the equipment mainly for qualifying journeys;
i.e. for journeys made between the employee’s home and workplace, or part of those journeys (for example, to the station), or for journeys between one workplace and another
● The offer of the use of a loaned or provided cycle (i.e. one for which ownership is not transferred to the employee) is available across the whole workforce, with no groups of employees being excluded. This does not necessarily have to be through a Cycle to Work salary sacrifice arrangement.
The tax exemption only applies when an employee mainly uses the cycle and cyclists’ safety equipment for qualifying journeys. A qualifying journey for an employee means a journey, or part of a journey,
● between his or her home and workplace, or
● between one workplace and another,
in connection with the performance of their duties of employment. So, for example, cycling to and from the station to get to work would qualify. In this case, ‘mainly’ means that more than 50% of use of the cycle and safety equipment must involve a qualifying journey.
Employees are not expected to keep mileage logs but employers should make clear to them that if they do not use the cycle mainly for qualifying journeys, they may lose the benefit of the tax exemption. In that event the employer would have to report the benefit in kind on form P11D, and account for Class 1A NICs, in the normal way. The employee would be liable for the tax due on the benefit in kind.

 

[GrumpyGregry]

Yes, that's pretty much my understanding. "Most" (which it says means over 50%) of the "use" (doesn't specify whether that is by journey, by mileage or by time) must be in qualifying journeys.

Good. My scheme mtb remains 'legal' then given that I've hardly ridden it at all in the last year.

 

[Downward]

I can relax in the knowledge that both my bikes are used primarily for commuting (Although is an extended commute classed as a leisure ride ?!)

I am one of those who have moved out of the car and onto a bike due to the Cycle to work initiative.

 

[GrasB]

Yes, that's pretty much my understanding. "Most" (which it says means over 50%) of the "use" (doesn't specify whether that is by journey, by mileage or by time) must be in qualifying journeys.

In a not to serious thought if it's mileage then you also have the thing off does that include extended commutes... imagine if my direct route was 10 miles total but I road 25 every day. Now is that 10 miles commute & 15 miles leisure or 25 miles commute?

Personally I've preferred to see a requirement to cycle in the equivalent of 1 day per working week over the lone period. This could be that you cycle in every day for 2 1/2 months in the middle of summer & then not cycling in at all in winter.

 

[GrumpyGregry]

in another not too serious thought I'm getting my new (3rd) scheme bike at the end of the month. The idea that someone can actively do some tax avoidance, and maybe even a spot of evasion, whilst still on the PAYE is irresistible.

 

[chap]

I got a Brompton on our scheme, a bike I could never have afforded otherwise.

I ride a full size bike most of the year, but on the days where I have to go between sites, or work late, or can't ride the full distance I would normally I take the Brompton.

It isn't *always* used for commuting, but I reckon the split is 80/20 in favour of journeys to work as opposed to leisure[1] journeys. It turns 40-50 minutes of walking (from home to train station, from station to work) into a pleasant 15-20 minute ride. The chap a couple of offices over from me got one on C2W too, his is used year round & he doesn't drive into Manchester anymore.

[1] By which I mean pottering down to the shops &c, it really is a very handy little bike.

I'm sure there are tales of people buying crabon fibre wunderbikes on C2W. Equally well there are any number of tales of people getting their first "proper" bike, being introduced to the joys of their local bike shop, being able to afford something more than some heavy, misery inducing BSO for the first time, &c &c.

Glad to hear that the scheme worked out (as intended) for you, and good on you for choosing the Brompton

There is always the chance that some people have been introduced to cycling, or given the opportunity to afford an otherwise cost-prohibitive yet worthy model, and that they have thus enjoyed the benefits of it. These remain the heart-warming tales that we wished would be more commonplace.

However, I would deem it far from flippant to say that the majority of up-takers have not followed this example, as evidenced by those who get 2nd helpings (and more) at the taxpayers expense. Like the MP's, I do not completely blame them, they are just acting upon natural opportunistic instincts and benefiting from a poorly-thought out scheme. Similarly, I would think one could easily justify such misuse through a degree of entitlement.

What I dislike is how poorly planned the scheme is, it should be available to all irrelevant of job, one should only be able to claim a single bike every 5 or so years, and cycling facilities should follow (especially in the public sector - Hospitals, Council offices, Libraries - where the scheme should be heavily marketed.) Finally, there should be a cut off for a minimal level of quality (think anti-BSO), better shops (not Halfords) should be encouraged to participate, and the scheme should be available especially (if not exclusively) to those on low incomes, and perhaps (perhaps) those on benefits.

This would justify its being a Government scheme, and would make it more than a just plaything of the middle-class.

 

[beastie]

I can relax in the knowledge that both my bikes are used primarily for commuting (Although is an extended commute classed as a leisure ride ?!)

I am one of those who have moved out of the car and onto a bike due to the Cycle to work initiative.

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