Cycle to Work Scheme

[NUKe]

I personally feel the Government should drop the scheme, and spend the tax revenue on improvements for all. The scheme does nothing but to help people on the hire rate of tax buy expensive bikes they do not need. The money would be better spent given to the CTC or sustrans to help promote cycling. A fairer system would be to remove VAT from Cycles to benefit all not the few. And yes if my employer took part in the scheme I could benefit to the full amount and possibly would. But I do not feel it is the best way to encourage cycling

[sirmy]

I work for a council which last year and this have run a series of after work rides through their sports development section but has failed to implement C2W for the pas two years despite plenty of people expressing an interest!

[NukeThemAll]

NUKe; an interesting view with which I have some sympathy. If you delve further into companies' experiences of implementing C2W, you generally find that it does not result in significantly more people cycling to work. Those that already do either come in on much nicer bikes or continue to commute on their hack bikes and use C2W to buy another bike (road, MTB).

[ianr1950]

One of the many concerns that companies have about implementing the C2W scheme is that of residual value. As discussed here and elsewhere, the employee buys the bike outright (ie re-pays his/her employer) via the salary sacrifice. Then, the employer **may** allow the employee to purchase the bike for an additional sum of money.

And here, boys and girls, is the problem!

To ensure that there is no Benefit in Kind (BIK) taxation, the employee must purchase the bike for a 'fair market value'. Guess what? If you ask your local HMRC what a 'fair market value' (FMV) is for a bike that's say, 12 months old, they will **not** commit to a figure. So.... let's say your employer allows you to buy the bike for 5% (+VAT) of its original RRP. When HMRC decide to audit the company at some later date, it can decide that, sorry, 5% did not constitute a FMV. So, someone (you? your employer?) has to stump up more money for BIK taxation. Or, of course, 'prove' that 5% or whatever really is a FMV (if you bought a shiny £1K bike, looked after it, would you be happy to sell it after a year for £50?)

So, any company that proceeds with c2W does so at risk, with no hope of having the FMV agreed beforehand by HMRC.

So, no, it wouldn't surprise me if I found out the HMRC hasn't implemented C2W. Joined-up government? Don't make me

And yes, I am aware that both Cyclescheme and Halfords would argue that 'there have been no adverse taxation outcomes to date' but (a) would they be aware? and (b) past performance is no guarantee of future.....

You are not just buying the bike for 5% though are you.

You have bought the bike over the previous 12 months or whatever period is in place by repaying the 'loan', you have just bought the title to the goods in effectby paying the 5%

We have had the scheme in place where I work for quite a number of years and HMRC were called in and they were perfectly happy with what was being done.

[workhard]

NUKe; an interesting view with which I have some sympathy. If you delve further into companies' experiences of implementing C2W, you generally find that it does not result in significantly more people cycling to work. Those that already do either come in on much nicer bikes or continue to commute on their hack bikes and use C2W to buy another bike (road, MTB).

Precisely the objection being raised here by non-scheme members. Several people have had new bikes and have never ridden them to work, one person got a large man's road bike utterly at odds with her petite female body shape. This has raised questions amongst the staff about the ethics of the scheme and the integrity of the individuals in it and us as an organisation.

I will be paying my FMV on my current bike on 30 June, or whenever after that finance give the numbers to me, and will continue to commute on it for the foreseeable future. On 1st July I hope to collect my new MTB which is going to see precious little tarmac commuting action. Wrong as a very wrong thing I know. Guilty as charged M'Lud.

[NukeThemAll]

Nice to see a discussion of the ethics of participating in the scheme! I suspect the vast majority of companies make negligible effort to comply with the rules/guidelines and thus perform no checks whatsoever that the bike is used for commuting for at least some of the time.

Although individual tax offices may perform an audit and declare that no BIK is payable with 5% FMV, the point is that they seem remarkably resistant to agreeing this value prior to scheme take-up. There is absolutely nothing to stop HMRC from demanding that every bike is, for example, assessed individually (and possibly by an independent organisation such as your LBS) for its FMV. Of course, an FMV significantly higher than 5% would essentially nullify the C2W benefit. One LBS already offers 17.5% discount to my company.....