Bike to work scheme changes

Amphidromic
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Joined: 20 Aug 2010, 2:18pm

Re: Bike to work scheme changes

Post by Amphidromic »

'if it is lower than 25% then they would need to explain why the value was lower (e.g. wear and tear)'

- so every incentive to scratch your new bike and otherwise lower its value
TeamNumpty
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Joined: 20 Aug 2010, 2:17pm

Re: Bike to work scheme changes

Post by TeamNumpty »

How many people bought a bike from a particular shop because they accepted the BTW vouchers, rather than their LBS?

I am personally waiting for my voucher to come through for a shiny Van Nicholas to make by 12 mile each way commute a bit more enjoyable. If I thought I would have to pay the full amount I would have spent several hundred pounds less!

I will see what my employer does about this..hopefully they'll ignore the increase.
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drsquirrel
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Re: Bike to work scheme changes

Post by drsquirrel »

If you have problems at the end of your current one - ask your company to hire it to you for free as long as possible.

No final payment... if you do come to leave, they can offer it to you, maybe 3-4 or more years later when the value can easily be assumed lower.



This is basically Government vs HMRC.

Gov needs now to set up a proper scheme, not a piggy back scheme - and finally allow "Hire Purchase".



I also notice the article says the bike may be purchased... this is WRONG. The company may wish to sell it, they may suggest it could be possible - but they cannot say they WILL sell the bike at the end as this is Hire Purchase and outside of the rules.
GeoffR
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Re: Bike to work scheme changes

Post by GeoffR »

The contract that my employer (a bank) came up with was basically that we "bought" the bike over the initial twelve month period. If we leave before five years we are supposed to hand the bike back but after 5 years the bike is ours for a nominal sum (5%) or we return it to the bank's outsourced scheme provider. We are only 2 years into the scheme so the nitty gritty of the 5% bit hasn't actually come up yet but to be frank, if after 5 years anybody tried to claim anything off me they could have the bike - five years of cross London commuting on a folder should have left it pretty worthless!
tog
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Joined: 9 Jan 2007, 10:57am

Re: Bike to work scheme changes

Post by tog »

One day HMRC will write in English that we can all understand! If this brings some clarity to the scheme then it is positive, however I think most of us currently in the scheme did our calculations based on the final payment being 5% or thereabouts.

Sadly I think this is another example of the government incrementally getting us to part with more money.
andun84
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Re: Bike to work scheme changes

Post by andun84 »

GeoffR
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Joined: 20 Aug 2010, 2:18pm

Re: Bike to work scheme changes

Post by GeoffR »

Thanks Andun,

It seems pretty clear - if I hold on to it for five years it's mine for free!

Cheers
mark a.
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Re: Bike to work scheme changes

Post by mark a. »

Cyclescheme have released some info:

http://www.cyclescheme.co.uk/employer,intro.htm

It seems that they're essentially saying that "we'll do the hard work of doing the final valuation" instead of the employer. For those who's suddenly found that they'll have to pay a shedload more at the end of the year have the option to extend the loan period. I'm not sure how that helps, though - presumably you'll still end up paying more than you'd originally expected.

Halfords are essentially saying "errrm, we'll get back to you":

http://www.cycle2work.info/siteemployerindex

Clear as mud!
simonconnell
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Joined: 23 Aug 2008, 7:31am

Re: Bike to work scheme changes

Post by simonconnell »



"The exemption for certain loaned cycles will be prevented from applying if any agreement builds in from the outset an automatic transfer of ownership to the employee at the end of a loan or hire period"

Well that's my idea done for...

This is interesting:

"this approach cannot be used for expensive specialist cycles that have been individually hand built to order"

Overall a bit of a stinker, and I'll be interested to see how the likes of Halfords, who make plenty of money from the scheme, propose to get around the restrictions in order to maintain the viability of the scheme.
andun84
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Re: Bike to work scheme changes

Post by andun84 »

mark a. wrote:Cyclescheme have released some info:

http://www.cyclescheme.co.uk/employer,intro.htm

It seems that they're essentially saying that "we'll do the hard work of doing the final valuation" instead of the employer. For those who's suddenly found that they'll have to pay a shedload more at the end of the year have the option to extend the loan period. I'm not sure how that helps, though - presumably you'll still end up paying more than you'd originally expected.

Halfords are essentially saying "errrm, we'll get back to you":

http://www.cycle2work.info/siteemployerindex

Clear as mud!


I guess a few people are logging on as that site is very slow at the minute.

You can only extend to a maximum of 18 months or else the hire agreement becomes subject to much stricter controls under the Consumer Credit Act therefore I would be very surprised of any employer would be prepared to accept that.

As you say there is likely to be little demunition in value between 1 year and 1.5 years so the cost on disposal will still be significantly higher than what people have been used to.
andun84
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Re: Bike to work scheme changes

Post by andun84 »

simonconnell wrote:


"The exemption for certain loaned cycles will be prevented from applying if any agreement builds in from the outset an automatic transfer of ownership to the employee at the end of a loan or hire period"

Well that's my idea done for...

This is interesting:

"this approach cannot be used for expensive specialist cycles that have been individually hand built to order"

Overall a bit of a stinker, and I'll be interested to see how the likes of Halfords, who make plenty of money from the scheme, propose to get around the restrictions in order to maintain the viability of the scheme.


That was always the case as hire purchase agreements are not alllowed under the salary sacrafice schemes (hire purchase = automatic right to own at end of loan period).

Again specialist bikes will likely have a very high after market value and therefore simple formulas will not do. It's all about fair market value. They are just saying that where something holds its value much better then it needs to be treated differently. Probable approach would be to get a couple of compenent people to value it (ie industry experts).
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drsquirrel
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Re: Bike to work scheme changes

Post by drsquirrel »

andun84 wrote:
mark a. wrote:Cyclescheme have released some info:

http://www.cyclescheme.co.uk/employer,intro.htm

It seems that they're essentially saying that "we'll do the hard work of doing the final valuation" instead of the employer. For those who's suddenly found that they'll have to pay a shedload more at the end of the year have the option to extend the loan period. I'm not sure how that helps, though - presumably you'll still end up paying more than you'd originally expected.

Halfords are essentially saying "errrm, we'll get back to you":

http://www.cycle2work.info/siteemployerindex

Clear as mud!


I guess a few people are logging on as that site is very slow at the minute.

You can only extend to a maximum of 18 months or else the hire agreement becomes subject to much stricter controls under the Consumer Credit Act therefore I would be very surprised of any employer would be prepared to accept that.

As you say there is likely to be little demunition in value between 1 year and 1.5 years so the cost on disposal will still be significantly higher than what people have been used to.


It isn't Hire Purchase at all! If your company says they will sell it to you it them becomes Hire Purchase and is outside of this scheme (which is why companies can only say they MAY allow you to have it for a final value at the end).


I'd avoid cyclescheme like the plague, and do it yourself, if your company don't give you the choice and you now have to deal with possible higher % - just go into a shop and ask them for a discount and buy it. Since cyclescheme and the other people tend to only give 90% or so of the value to the shop!
Hutchitr
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Joined: 20 Aug 2010, 4:12pm

Re: Bike to work scheme changes

Post by Hutchitr »

I am not in the scheme but isn't one option for everyone not to buy their bike at the end of the scheme thus forcing the companies in the scheme to offload lots of bikes thus crashing the second hand bike market. If then the companies that originally sold the bikes were to agree to take these bikes off the companies hand at say 5% of original price then you could all buy your bike legitimately from the company that you originally went to at say 5% of its originl value.

To me this is above board as your company has bikes on its hands that it can't sell to you because you don't want it so are forced to sell back to original company that sold it at any price they want to as they own it. You then buy your original bike backfor 5% of the original price, from the shop you originally bought it from. :? :lol:
sailingcyclist
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Joined: 20 Aug 2010, 3:34pm

Re: Bike to work scheme changes

Post by sailingcyclist »

I have some experience in C2W since I designed the Halfords C2W website and am involved in providing C2W schemes with my current company and I've done a huge amount of research in this area. ( NB: I don't work for Halfords)

In my opinion this actually is good news for C2W because the end valuation was always a fudge. As previous posters have said, does anyone really believe that a £1,000 bike is really worth £50 after 12 months? If it was, why would anyone be so keen to buy it?

There are several solutions and they are simple to implement. Choose the one that suits you.

1: The employer simply makes a free loan of the bike to the employee under a new agreement which has a term long enough to ensure the bike has reached a negligible value. There are some conditions to be followed about the disposal of the bike at the end of the period. In practice nothing changes except your salary sacrifice ceases. The really good news is that you don't need to pay anything to acquire the bike. We have an extended loan agreement we can supply which covers everything required. I'm happy to provide this FOC to anyone who makes a donation to a cycling charity of their choice.

2: The employer simply gives the bike to the employee after 12 months. They will need to report a taxable benefit in kind to HMRC of the value of the bike on the employee's P11d form. In the case of the 12 month old £1,000 bike this value would be £212.75 (25% of £1,000 less vat) the taxman will charge tax on the £212.75 which if you're a lower rate (20%) taxpayer, will be £ 42.55. If you're a higher rate (40%) then it will £85.10. You don't even have to find this sum because the P11d has the effect of adjusting your tax code up slightly for the following year. So the £42.55 or £85.10 will be recovered by HMRC over the course of the following year. This is about £3.54 per month for our lower rate example. The figures will vary slightly depending on your employer's VAT status and of course the original purchase price of the bike. Also if you let the loan go on for a couple of years the FMV % drops even further.

The people it is bad news for are those administrators who take title of the bike from the employer at the end of the scheme and then sell it to the employee making a nice little profit. I think HMRC deserves praise for stopping that little racket.

So as I said this is actually really good news for C2W.
jamesmorgan
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Joined: 14 Jan 2009, 9:18am

Re: Bike to work scheme changes

Post by jamesmorgan »

One thing I don't really understand about the scheme is why the employer has to rent the bike at 12 monthly payments of 1/12 of the purchase price (ie to recoup the value within one year). If I was renting a car I wouldn't expect such onerous terms. Clearly if they are expecting to effectively give the bike away at the end of the year, they have to do this. However, if they are expecting to charge 25% at the end, then they can simply rent the bike for 75% of its purchase price. The tax benefits would not be as great doing it this way - but it does seem to meet everyone's needs (including the government).
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