Mehran
Peloton Rider
Posts: 192
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Post by Mehran on Jul 31, 2014 22:39:49 GMT
I'm self employed...so I get naff all...so bought my 500se out my own money on the credit card(which gets paid off in full each month).
From the sounds of it, its just another scam for company's to rip of tax payers and their employees(renting the bike to you for the full cost of it? really? then taking it back if you don't pay even more?)
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Post by r0b1et on Jul 31, 2014 22:42:06 GMT
I read it as you pay a fee for 3 years. Same as if you paid a fee for 1 day. YOu give it back when the period is over.
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Post by jondxxx on Aug 1, 2014 7:34:53 GMT
I went for the cycle instead of work scheme that my company offered me.
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Post by ChrisD on Aug 1, 2014 7:54:09 GMT
I've just come to the end of a Cycle to work agreement with Cyclescheme and my employer (which is also a university). I think I've got my head around how it works now so I'll pass on my experience with the important disclaimer that I may have missed one or two fine details and that end of scheme payments differ from scheme to scheme and employer to employer as I'll explain later. I gather Halfords run their own scheme and I think the benefit (for employers) is that they take on the ownership 'risk' which means less hassle for employers, and possibly more flexibility for employees who could then change job and not have the change of employer affect their agreement (I may have that last bit wrong). When you take out the agreement the bike first belongs to your employer. You pay by instalments and you may get tax relief on the instalments if your employer offers a salary sacrifice scheme (I believe the payments are normally deducted from pre-tax salary so you get taxed on the rest after any salary sacrifice deductions). After 1 year the payments are normally complete and now comes the bit where there's a fair amount of divergence from what I can gather. When you have completed the last payment to your employer the bike still belongs to them until you pay what is called a fair market value (FMV) payment to your employer. When the scheme first started HMRC allowed the agreement to be closed out by a token FMV payment (around 3% I believe) which doesn't reflect the price that 1year old bikes tend to sell for (anyone trying to get hold of a red T3 these days can testify to that!) So, the perception that the token gesture FMV payment was unfair, coupled with the popularity of the scheme, led HMRC to review the FMV and it now can be as much as 25% for a £500-1k bike, which is closer to what second hand bikes go for. You can challenge the FMV if your bike has been hammered by a heavy daily commute but you need to provide evidence of high wear and tear and argue the case. If you don't pay this FMV payment then the bike still belongs to the employer (or to Halfords in their scheme I believe), and so have effectively paid a lot of money to lease a bike for a year. As green as they desire to be my employer doesn't want to own a fleet of bikes so I think, like mine, some employers haven't changed the FMV payment that they ask for from the rate they charged in pre HMRC review days. This means that HMRC views this lower FMV payment as a taxable benefit and will be subject to a P11D tax adjustment at the end of this financial year to pay tax on he difference between the lower FMV payment the employer asks for and the 25% FMV figure that HMRC believes is appropriate. This is what will happen in my case. I will still make a saving overall, and had the benefit of paying by instalments, but the saving is not as good as in the old days before the FMV review. Some of you hard-nosed types could probably negotiate a better deal from a bike shop than I can and see a similar saving, perhaps without the benefit of spreading the payments. Link to HMRC sliding scale for FMV - www.hmrc.gov.uk/manuals/eimanual/eim21667a.htmHMRC acknowledge that FMV would lower if you 'leased' the bike for longer from your employer (there is a separate sliding scale for bikes below £500 and for bikes that cost £500 to £1k). If your employer spreads the instalments over a longer period you will then pay a lower FMV rate at the end of the agreement. By the time the lease period gets to be 4 years you are down to the sort of FMV rates that existed before the review. Cyclescheme have seen this and arranged a nifty alternative with employers who agree to this that they will take on the ownership of the bikes at the end of the period of instalment payments and then lease the bike to you (if you can access their scheme via your employer) for a further 3 years. To get this facility you make a one off 'non-refundable deposit' payment to Cyclescheme equivalent to the FMV rate that HMRC set for your bike at the end of 4 years (around 3-7%). Then, at the end of this period the bike becomes yours as you have already made the appropriate FMV payment. A further plus here is that if you change jobs during this extended period it doesn't affect your agreement as it is now with Cyclescheme. This effectively allows you to make savings closer to those available in the pre review days and meets the requirements of the HMRC review. Even if your employer offers Cycle to Work via Cyclescheme, this option is only open to you if your employer allows the transfer to Cyclescheme after you complete your instalment payments to them, which mine does not. I'm not sure if other schemes (e.g. Halfords) have this extended lease type option. Phew! Hope that's helpful for someone at least and apologies for any error and omission issues. Remember, (puts on speedy-advert-small-print-voice) your experience may differ from mine and you cannot keep your bike if you do not keep up your payments...
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Deleted
Deleted Member
Posts: 0
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Post by Deleted on Aug 1, 2014 8:33:21 GMT
Thanks for the info Chris_D, all sound a bit of a faff and no wonder my employer has not used this scheme before.
My naive view, from briefly browsing some of the schemes and using their online calculators, was I could get a £1,000 bike tax free and pay for it over a year through installments. The reality sounds very different.
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Post by beatnik69 on Aug 1, 2014 8:45:11 GMT
Chris, your scheme sounds similar to the one in my work. I calculated that I could get a new Alur 700 for roughly £550.
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Post by goffski on Aug 1, 2014 8:54:03 GMT
Thanks for the info Chris_D, all sound a bit of a faff and no wonder my employer has not used this scheme before. My naive view, from briefly browsing some of the schemes and using their online calculators, was I could get a £1,000 bike tax free and pay for it over a year through installments. The reality sounds very different. Thats the impression i get! Not really doing it for the saving, doing it to spread the £1000 (£700 in theory) over 12 months. So far theres not been any hassle, the missus just had to fill an online form in. The voucher arrived yesterday and they start to take about £56 out of her salary a the the end of Aug for 12 months. Her boss doesn't seem to think they do much after the 12 months as he's now had his for over 12 months. His boss seems the think the same and he's just done it this year for his missus! They'll porb make much more of a saving as they're in the higher tax bracket.
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duffer
Peloton Rider
Posts: 126
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Post by duffer on Aug 1, 2014 16:32:24 GMT
Am I missing something here, but if you pay a one off price for a three year extended rental, how can it be a rental for another three years? If it's a one off payment, doesn't it technically become yours the second you pay that rental fee? As you've paid the rental up front you can't default on it and have the bike repossessed I think you're logically correct, but I suspect it's about avoiding tax issues like "Benefit-in-kind". Something to do with the fact that it's still not legally your bike, perhaps.
I'd ask an accountant, but what are the chances of finding one on a Friday when the golf courses are open.
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duffer
Peloton Rider
Posts: 126
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Post by duffer on Aug 1, 2014 16:53:39 GMT
Thanks for the info Chris_D, all sound a bit of a faff and no wonder my employer has not used this scheme before. My naive view, from briefly browsing some of the schemes and using their online calculators, was I could get a £1,000 bike tax free and pay for it over a year through installments. The reality sounds very different. I think the key to it is what happens at the end of the year, and the terms on which you get to keep the bike. It definitely is one of those 'read the small print' type of things.
The scheme I'm with (Cyclescheme) is the same one as ChrisD, and for me it works out well - but clearly there's some variability in the different schemes and how they are being administered.
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Post by ChrisD on Aug 1, 2014 20:41:29 GMT
Chris, your scheme sounds similar to the one in my work. I calculated that I could get a new Alur 700 for roughly £550. I think it's likely to be a bit more than that by my calculations, but a lot depends on the FMV charged by your employer at the end of the year and how much tax you will pay on the difference. From my point of view there will almost always be a saving and it's likely to be around 10% or maybe more, plus the opportunity to pay by instalments.
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Post by bobcollege on Aug 1, 2014 23:57:09 GMT
I'm on my third cyclesheme.co.uk bike through my work, wife acquired my first bike, my T3 was my second and now my pro carbon is my third.
My T3 was £5 per week over 12 months and I took the option to take ownership at the end of the term which cost around £60. My PX Pro Carbon is £19 per week.
It's an easy way to own a bike, I don't miss the money coming out of my wages and allows me to save up for other things like holidays etc.
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Deleted
Deleted Member
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Post by Deleted on Aug 2, 2014 5:44:54 GMT
I'm on my third cyclesheme.co.uk bike through my work, wife acquired my first bike, my T3 was my second and now my pro carbon is my third. My T3 was £5 per week over 12 months and I took the option to take ownership at the end of the term which cost around £60. My PX Pro Carbon is £19 per week. It's an easy way to own a bike, I don't miss the money coming out of my wages and allows me to save up for other things like holidays etc. I'm struggling to see the benefit of these schemes over taking the money out on a 0% credit card. Bobs T3 ended up costing him £340 with that scheme and he would not have owned the bike until paying the final FMV. With a 0% card (paid off in full etc), it would have cost £300 and you own the bike from day 1. Am I missing something? Where are the tax savings?
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Post by ChrisD on Aug 2, 2014 6:23:40 GMT
I'm on my third cyclesheme.co.uk bike through my work, wife acquired my first bike, my T3 was my second and now my pro carbon is my third. My T3 was £5 per week over 12 months and I took the option to take ownership at the end of the term which cost around £60. My PX Pro Carbon is £19 per week. It's an easy way to own a bike, I don't miss the money coming out of my wages and allows me to save up for other things like holidays etc. I'm struggling to see the benefit of these schemes over taking the money out on a 0% credit card. Bobs T3 ended up costing him £340 with that scheme and he would not have owned the bike until paying the final FMV. With a 0% card (paid off in full etc), it would have cost £300 and you own the bike from day 1. Am I missing something? Where are the tax savings? if your employer offers a salary sacrifice scheme then the payments are deducted from your salary before tax is applied so saving you the tax on your payments. That way you effectively get a tax rebate on the bike, which is where most of the savings come from. The 'cost' associated with getting the tax saving is that the bike is effectively leased from the employer which then requires the FMV payment at the end of the agreement to take ownership of the bike. This can wipe out a lot, but rarely all of the tax rebate so there is normally some saving and the benefit of spreading payments. If your employer, like mine, decides to charge a lower FMV rate than the HMRC proposed rate, then you might save some more as you only pay tax on the difference between the FMV rate charged and the one proposed by HMRC. Or, if you can use an extended agreement option where ownership switches to someone like Cyclescheme for a further three years you will also save more. None of the savings are as good as in the original pre review days of the scheme but, if you do your homework up front, you might find you can save a welcome amount and the end of agreement arrangements aren't onerous.
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Post by chiban3 on Aug 2, 2014 7:26:54 GMT
I think the other point to note that I haven't picked up on reading through so far is that you do need to be able to demonstrate, in principle at least, that the bike will be used in connection with either performing or getting to work. Otherwise it becomes just another taxable benefit.
My work scheme quotes this requirement as being 50% of the bike's use, which is impossible to measure, but since I invariably work 100+ miles from home, often with a laptop bag and suitcase, makes it a little difficult to blag.
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Post by KiwiBeard on Aug 2, 2014 7:38:02 GMT
When I briefly spoke to a guy at Evans about it, he said you don't even need to buy a bike with it. Could just spend up to £1000 on, say, a GoPro/accessories/etc. not sure how this can be true based on what others say on here.
I'm with Al. I would rather just get a 0% credit card and pay off over 12/15 months. There is no way I could convince our FD at work anyway, even if the Big Boss is a huge cycling fan.
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