# Cycle to Work - Maximum



## doogle84 (27 Jun 2011)

My employer is soon to introduce C2W through Cyclescheme. I've been informed that there is a rule which means you can't buy a bike for more than the maximum £1k, due to the unbearable confusion caused by the bike then being partly owned by my employer and partly by me (I may have paraphrased here slightly).

Is this right? I can't find anything on this, except I'm sure I've seen the Evans scheme say you can pay the difference if your purchase is over the max. I now fear this may just mean accessories.

I've had my eye on a Condor Fratello but my build was going to be safely over the max, and I assumed I could just pay the difference. If not I'm a bit confused as to why Condor say they accept Cyclescheme vouchers given most of their builds are likely to be over the limit.


potentially-disappointed-Doug


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## gregsid (27 Jun 2011)

I think the £1000 limit has been imposed by the government. There's bound to be some dealers that will bend the rules by putting down a different make/model/value on the official paperwork and then the customer paying extra for the bike they REALLY want!


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## Alembicbassman (27 Jun 2011)

I've heard you can pay the difference, but how this affects ownership of the bike would be an issue.

You don't own the bike until there's been a final payment based on the HMRC valuation matrix

This valuation has increased in the last 12 months following new guidance.

You may be in for a nasty surprise when the lease is up.


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## SquareDaff (27 Jun 2011)

OR maybe not - most companies (mine included) just give you the bike as a taxable benefit. You just pay the tax on the final valuation rather than the full amount. If you took out the full £1k then you're final valuation would be 25% of that value (I believe that's the government guidlline - please correct if I'm wrong) so £250. Your final payment is effectively the tax you'd pay on £250.


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## abo (27 Jun 2011)

Don't they allow you to pay for parts on C2W? Why not see if the bike shop will charge £1000 for you frame/wheels or whatever adds up to close to that amount, satifying the C2W rules and then buy extra 'parts' with your own cash. IYSWIM


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## suecsi (27 Jun 2011)

If you go over £1000, your company needs to have a credit licence. That is what puts some companies off, as getting one is quite expensive if the only thing it is being used for is the cycle scheme. We kept it at £1000 or under because of this as we only have 15 staff and only 3 joined the scheme.


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## upsidedown (27 Jun 2011)

You can pay the difference yourself. When you come to do the order on the Cyclescheme website there is an option to select "custom build". Just select that and get the quote with the name of the frame or whatever on it.


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## VamP (27 Jun 2011)

Talk to your company.


The Ride2Work scheme (Evans) allows unlimited spend on bike, but only the first £1000 is subject to the special VAT and tax treatment.

My employer, provides 2nd year lease free of charge, so the final valuation is significantly lower and treated as a taxable benefit. 

For 40% tax payer, the first £1000 of the bike ends up costing cca £450. The rest costs what you paid. Your risk is what happens if you leave your employer in those two years, but again that only applies to the first £1000.

Obviously you can't sell the bike while it's on the scheme.


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## billy1561 (27 Jun 2011)

The place I work insist its £1000 max as per the gov rules. However, my lLBS are very flexible and are happy for me to pay the difference but they will disguise it as a £1000 bike.


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## doogle84 (30 Jun 2011)

Looks like a few avenues to explore at the time, so all is not lost. Thanks all!


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## MarcA (30 Jun 2011)

Where I work we use Evans. People pay more if they want to but the company only pays up to £1k. Employee makes up the difference. Guess Evens are happy to sell as much as possible.


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## fossyant (30 Jun 2011)

I put the extra towards my bike, that said, it was 2 years ago before the new legislation about the 'final value'.

Talk to your LBS, as you only put the 'cost' down on the application. You then get a 'voucher' for £1k through the post, so when you pop down to the LBS with the voucher, who's to say that you didn't get a bit 'carried away'.


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## Norm (30 Jun 2011)

The danger during the period of the rental contract is that you have essentially given the money to your employer, on the expectation that they will sell you the bike at the end of the rental contract. They might not. They might sack you and a vindictive manager might decide to keep the bike. You have no redress.

The danger at the time of sale is that you need to buy the bike at the % of the bike's original purchase price. If you've stumped up £500 to get a £1,500 bike, you then need to pay 25% of £1,500 to buy the bike.


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## APK (30 Jun 2011)

Norm said:


> The danger during the period of the rental contract is that you have essentially given the money to your employer, on the expectation that they will sell you the bike at the end of the rental contract. They might not. They might sack you and a vindictive manager might decide to keep the bike. You have no redress.
> 
> The danger at the time of sale is that you need to buy the bike at the % of the bike's original purchase price. If you've stumped up £500 to get a £1,500 bike, you then need to pay 25% of £1,500 to buy the bike.




I think you will find you will only have to pay the 25% on the part (£1000) that is in the scheme, not the part £500 you have paid for, obviously if you decide not to make the final payment, then you will have to give the full bike back, losing all of your contribution.

As has been said, I think you can buy any value bike on the scheme, but if it is over £1000 then the company needs a consumer credit license, hence why most restrict the limit to £1000.


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## Norm (30 Jun 2011)

APK said:


> I think you will find you will only have to pay the 25% on the part (£1000) that is in the scheme, not the part £500 you have paid for...


I prefer to take the word of HMRC rather than entering into any "I think you will find" contest. 



> The original price of the cycle is the price for which it was on sale as new at the time when it was first provided to the employee.


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## APK (1 Jul 2011)

Norm said:


> I prefer to take the word of HMRC rather than entering into any "I think you will find" contest.




Fair enough, but I can't find any reference to the figure being based on the "full" purchase price, perhaps you could show me?

I can only find : "In either case, as long as any payment that the employee makes for the cycle is equal to or more than the market value, there will be no tax charge under the employment income rules. If the employee pays less than market value, the difference will be taxable as employment income. "

So if an employee has already paid £500 towards the cost of a £1500 bike it could be argued that they have already paid more than the market value?


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## lejogger (1 Jul 2011)

APK said:


> Fair enough, but I can't find any reference to the figure being based on the "full" purchase price, perhaps you could show me?
> 
> I can only find : "In either case, as long as any payment that the employee makes for the cycle is equal to or more than the market value, there will be no tax charge under the employment income rules. If the employee pays less than market value, the difference will be taxable as employment income. "
> 
> So if an employee has already paid £500 towards the cost of a £1500 bike it could be argued that they have already paid more than the market value?



I run our C2W scheme, so consider myself to have a decent knowledge of the workings. We wouldn't let our employees go over the £1k in the first place, but my opinion in this instance would be that:

If you have made a £500 contribution on top of your £1k voucher then this should sit outside of any tax or disposal fee payment. 

The only element that you are receiving a tax break on is the £1k salary deduction. The only inforamation your employer will hold regarding your bike will be the £1k that they are recovering from you, so if at the end of the day you are gifted the bike as a benefit in kind after 12 months, or you pay some element of a fee, the P11d will only show the value of £250 minus any final payment to your employer to be taxed. 

If you are taxed on 25% of the whole bike then you're paying tax for a benefit value that you haven't received. That £500 has already been taxed as earnings when you earned it, and it's not included in your salary dedution that is making you the savings in the first place. 


EDIT: As previously stated however, this is based on the company allowing you to take ownership of the bike at the end of the hire period.


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## APK (1 Jul 2011)

Thanks Lejogger, that would be my understanding, I can't see how you would be expected to make a payment based on the element you paid for in full yourself, obviously if you do "hand the bike back" then you would presumably lose your share, unless the company was kind, and returned anything they received over the 25% amount of the C2W balance.


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## subaqua (1 Jul 2011)

lejogger said:


> I run our C2W scheme, so consider myself to have a decent knowledge of the workings. <SNIP>
> EDIT: As previously stated however, this is based on the company allowing you to take ownership of the bike at the end of the hire period.




then you will also be aware that if there is an inmplied " you can keep the bike" then the scheme is operating outside of its remit and the tax benefits do not apply. 

Norm highlighted this in one of the namy c2w threads. sasdly being one of the few cyclists on site and my employer opening up a new scheme ( Halfords FFS !!) I am getting loads of questions so have tried to learn as much as i can. 

I think the scheme is a waste of money and time especially now the "fair market value " has been determined. 

Glad I bought my own bike(s)on a 0% credit card deal.


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## Norm (1 Jul 2011)

APK said:


> Fair enough, but I can't find any reference to the figure being based on the "full" purchase price, perhaps you could show me?



I have already quoted the relevant text.


> The original price of the cycle is the price for which it was on sale as new at the time when it was first provided to the employee.





APK said:


> I can only find : "In either case, as long as any payment that the employee makes for the cycle is equal to or more than the market value, there will be no tax charge under the employment income rules. If the employee pays less than market value, the difference will be taxable as employment income. "
> 
> So if an employee has already paid £500 towards the cost of a £1500 bike it could be argued that they have already paid more than the market value?


This relates to the market value at the time of the sale, not at the time of the purchase, so it's irrelevant.

The guidelines for the simplified valuation themselves refer to the "*Original Price*" of the bike, not the amount which the employer pays for the bike or the value of the voucher.



lejogger said:


> The only element that you are receiving a tax break on is the £1k salary deduction. The only inforamation your employer will hold regarding *your* bike will be the £1k that they are recovering from you, so if at the end of the day you are gifted the bike as a benefit in kind after 12 months, or you pay some element of a fee, the P11d will only show the value of £250 minus any final payment to your employer to be taxed.


 The terminology I have highlighted there makes me concerned, as the bike is not the employees until the employee has paid for it.

That aside, I'd be saddened (but not that surprised) if an employer was as slack as you suggest in tracking their assets. 

However, whilst what you say might be the way that one particular scheme has been implemented, the inability to track the "original price" of the bike doesn't excuse the employers from correctly applying the taxable charges. That would be no different to telling HMRC that they didn't know what their employees earned last month so they guessed at the PAYE / NI deductions.

Subaqua, the scheme is still, IMO, worthwhile and can get you savings of 25%-30% on a new bike. However, with all the hassle and uncertainty, and deals available to cash buyers, I can understand why many don't bother. However, drop me a line if I can help in any way.


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## lejogger (1 Jul 2011)

subaqua said:


> then you will also be aware that if there is an inmplied " you can keep the bike" then the scheme is operating outside of its remit and the tax benefits do not apply.
> 
> Norm highlighted this in one of the namy c2w threads. sasdly being one of the few cyclists on site and my employer opening up a new scheme ( Halfords FFS !!) I am getting loads of questions so have tried to learn as much as i can.
> 
> ...



I think we all know that the liklihood of an employer wishing to have the cycles returned to them after the hire agreement is incredibly low. Realistically if an employee entered the scheme with the view that they were unlikely to be able to take ownership after the hire period then there would be very few participants. 

Yes there's a lot of red tape and wordy legality, but essentially it's a fantastic scheme designed to increase the health of your workforce, reduce your carbon footprint, and free up traffic and parking congestion around your sites. Employers doing all they can to make this scheme attractive to staff can only be a good thing.

The scheme is a long way short of a waste of money. The fair market value has not changed anything if the employer deals with it sensibly. We have moved from a nominal 5% charge (£50 on a £1k bike) to donating the bike as a benefit in kind. Tax on the residual 25% value for a standard taxpayer will be in the region of £50 knocked off your tax code. It makes it even better value. 

Also, the Halfords scheme is actually excellent IMO. They don't pocket any of the disposal fees like a lot of the schemes... they're happy to just get customers through the doors. They have a special order line to source a huge variety of different cycles that you wouldn't get in store, and the Boardman range is fantastic value for money.


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## lejogger (1 Jul 2011)

Norm said:


> The terminology I have highlighted there makes me concerned, as the bike is not the employees until the employee has paid for it.


A silly slip in wording. Obviously the bike is not 'yours' until the completion of the scheme, but may I suggest a bit pedantic to pick me up on it. Employers do not enter the scheme to be able to raise a fleet of bicycles for their own collection. We all know that in the real world the whole process of salary sacrifice and control accounts is a pain in the balls for employers and the sooner ownership can be transferred the better. 



Norm said:


> That aside, I'd be saddened (but not that surprised) if an employer was as slack as you suggest in tracking their assets.


Irrelevant. The employer has full records of outstanding debtors to the salary sacrifice scheme. Should their employee end then the balance is merely taken from their final pay packet.



Norm said:


> However, whilst what you say might be the way that one particular scheme has been implemented, the inability to track the "original price" of the bike doesn't excuse the employers from correctly applying the taxable charges. That would be no different to telling HMRC that they didn't know what their employees earned last month so they guessed at the PAYE / NI deductions.


The tax is paid on the residual value of the voucher not the original price. If the staff member wished to appeal to the HMRC that his bike had depriciated to a lower value then he can with the correct evidence. No employer with more than 2 employees on the scheme is going to insist on verifying the condition of all bikes before filling in the P11d forms, so it will go on the HMRC table of valuation in line with the salary sacrifice. 



Norm said:


> Subaqua, the scheme is still, IMO, worthwhile and can get you savings of 25%-30% on a new bike. However, with all the hassle and uncertainty, and deals available to cash buyers, I can understand why many don't bother. However, drop me a line if I can help in any way.


Yes I agree.. definitely worthwhile, but savings of much more than 30% can be made. Over 50% if you are a higher rate tax payer, the scheme is implemented sympathetically with regards to the final payment, and the organisation is able to reclaim the VAT on the bike.


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## subaqua (1 Jul 2011)

lejogger said:


> I think we all know that the liklihood of an employer wishing to have the cycles returned to them after the hire agreement is incredibly low. Realistically if an employee entered the scheme with the view that they were unlikely to be able to take ownership after the hire period then there would be very few participants.
> 
> Yes there's a lot of red tape and wordy legality, but essentially it's a fantastic scheme designed to increase the health of your workforce, reduce your carbon footprint, and free up traffic and parking congestion around your sites. Employers doing all they can to make this scheme attractive to staff can only be a good thing.
> 
> ...



the site i am on doesn't have much congestion. sadly it also won't allow bikes onto the site we have to leave them just outside as will the general public when the park opens on 27th July 2012. 

I asked all those who asked me about the scheme how often they would use the bike to ride to work. i don't think the answers i got will surprise people. 100% said they were not using it to get a bike4 for coming to work on but for getting a bike for personal use. 

i wonder how many halfords bikes will get used once or twice as they haven't been set up properly and people think cyclings crap rathber than the cycle the salesman at halfords advised steered them towards . 
they may be able to source a huge range but if they can't set em up properly whats the point.


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## lejogger (1 Jul 2011)

subaqua said:


> the site i am on doesn't have much congestion. sadly it also won't allow bikes onto the site we have to leave them just outside as will the general public when the park opens on 27th July 2012.
> 
> I asked all those who asked me about the scheme how often they would use the bike to ride to work. i don't think the answers i got will surprise people. 100% said they were not using it to get a bike4 for coming to work on but for getting a bike for personal use.
> 
> ...



I sympathise with this - If you're going to run a scheme, you should at least make sure that staff have somewhere to store their bikes safely, and get showered and changed. 

As for using the bike to cycle to work, there are many opinions on this. Yes the bike should be used mainly for this purpose during the hire period, but as long as the staff make some committment to it, even if it just a few weeks in the lighter months, then anything is better than nothing, and if they're getting fit and healthy away from the workplace as well, improving their concentration and motivation levels for when they are in work, then what's the harm if they don't slog it in in the snow and hail? 

Halfords is a tricky one. I know many people - myself included who have had very good service from very good mechanics working there. I have also heard that people haven't had such good experiences. And while this can be said of the majority of companies, from large multinationals, to your LBS, it shouldn't ever be the luck of the draw regarding getting a safe reliable bike to ride. I believe they're getting better. I haven't had any problems from them with 2 years of C2W schemes and over 100 staff getting bikes from them... but I do acknowledge that they're probably some distance away from where they should be


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## Norm (1 Jul 2011)

lejogger said:


> A silly slip in wording. Obviously the bike is not 'yours' until the completion of the scheme, but may I suggest a bit pedantic to pick me up on it. Employers do not enter the scheme to be able to raise a fleet of bicycles for their own collection. We all know that in the real world the whole process of salary sacrifice and control accounts is a pain in the balls for employers and the sooner ownership can be transferred the better.


 Which is why I only said it concerns me. Unfortunately, whilst it might have been a silly slip in your post, many other people don't have your level of understanding of the scheme and consider the bike to be theirs from the point that they collect it.



lejogger said:


> Irrelevant. The employer has full records of outstanding debtors to the salary sacrifice scheme. Should their employee end then the balance is merely taken from their final pay packet.


 Irrelevant with relation to the debtors, maybe, but very relevant in relation to control of the company's assets. 

Which is why I said "as slack as you suggest in tracking their assets" rather than "as slack as you suggest in controlling their debtor balances".



lejogger said:


> The tax is paid on the residual value of the voucher not the original price.


Whilst the other points are semantics and pedantics, this is a fundamental issue.

You say this despite, as I have already quoted twice, the HMRC saying that the Original Price should be used when relying on the simplified valuation method and the table of percentages actually having two headings of "*Original price of the cycle less than £500*" and "*Original price £500+*". 

Not only is there no mention anywhere on the HMRC site of the value of the voucher but many schemes don't even use a voucher.



lejogger said:


> Yes I agree.. definitely worthwhile, but savings of much more than 30% can be made. Over 50% if you are a higher rate tax payer, the scheme is implemented sympathetically with regards to the final payment, and the organisation is able to reclaim the VAT on the bike.


 It is indeed possible, with a very friendly employer, to get to that sort of number. However, most employers aren't that friendly and I wouldn't want to set an expectation that every scheme will save you that sort of figure.


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## APK (1 Jul 2011)

It seems a shame that the C2W scheme is potentially so complicated, and costly, surely a far better way to encourage people onto bikes for health/congestion/pollution reasons would be simply to make bikes under £1000 vat free, then everyone could take part, whether employed, self employed, unemployed or retired?


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## Norm (1 Jul 2011)

APK said:


> It seems a shame that the C2W scheme is potentially so complicated, and costly, surely a far better way to encourage people onto bikes for health/congestion/pollution reasons would be simply to make bikes under £1000 vat free, then everyone could take part, whether employed, self employed, unemployed or retired?


 This is true, unfortunately. 

For those who don't pay higher rate tax), the savings on most schemes would be less than the 16.7% reduction if VAT was removed.


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## lejogger (1 Jul 2011)

Norm said:


> Which is why I only said it concerns me. Unfortunately, whilst it might have been a silly slip in your post, many other people don't have your level of understanding of the scheme and consider the bike to be theirs from the point that they collect it.


I'm not looking to provoke, or cause an argument... and the last thing I would want to do is give false hope to people expecting to 'buy' a bike rather than 'hire' a bike, but are there any actual recorded incidents where all things being equal, people have joined a cycle to work scheme but then after their final payment been prevented from taking ownership by their employers? 
I run our scheme on the understanding that the employees taking ownership is a natural progression of the scheme and can see no reason why the employee should ever not do so should they wish to.
So while I understand the importance of ensuring people are aware of the potential risks, it seems that there is also an unnecessary level of scaremongering which is putting people off for no good reason. 




Norm said:


> Irrelevant with relation to the debtors, maybe, but very relevant in relation to control of the company's assets.
> Which is why I said "as slack as you suggest in tracking their assets" rather than "as slack as you suggest in controlling their debtor balances".


The difference of which is important to whom? C2W bikes are not assets. They depreciate at such a rate that there is no point considering them such. The salary sacrifice, managed by control accounts ensure that the full value paid out is returned, so there is no need for them to be logged as assets, especially considering they are paid for and then recovered during the course of one financial year. 



Norm said:


> Whilst the other points are semantics and pedantics, this is a fundamental issue.
> 
> You say this despite, as I have already quoted twice, the HMRC saying that the Original Price should be used when relying on the simplified valuation method and the table of percentages actually having two headings of "*Original price of the cycle less than £500*" and "*Original price £500+*".
> 
> Not only is there no mention anywhere on the HMRC site of the value of the voucher but many schemes don't even use a voucher.


I suppose this is a slightly moot point as our scheme would never let the employee purchase a bike that is more than £1k anyway - despite this being the whole point of this thread! But what I said still stands. Tax *IS *paid based on the residual value... however the residual value *IS* calculated based on the original price of the cycle. This however, is on the understanding that the maximum value of the cycle is £1k. I don't believe there is a clear answer on what should happen should the value be greater than this.
So while you are totally correct in your quoting of what the HMRC guidelines say, it doesn't change the fact that the guidelines should probably be altered to accomodate what happens should an employee manage to get a more expensive bicycle, and also the fact that the HMRC guidelines are essentially that... guidelines, and that any decently structured explanation in the event of a tax investigation should clear anyone of excess tax charges in the same way that a person with a £1000 bike that had depreciated to a lower level than £250 after a year of cycling can argue a lesser final payment. 



Norm said:


> It is indeed possible, with a very friendly employer, to get to that sort of number. However, most employers aren't that friendly and I wouldn't want to set an expectation that every scheme will save you that sort of figure.



I've not indicated that every scheme will - but at the same time there's no point continuing with the 'scheme-bashing' that in my opinion is totally unwarranted as 30% is probably the minimum that people can expect to save if their company operates one of the better schemes. Unfortunately most organisations are persuaded by the sales pitches of these smaller private sector organisations who sell the employer benefits over the employee benefits, causing them to forget that these companies need to operate at a profit, which comes right out of the savings the employees could be making. Running your own scheme, or going with a large national company happy with the increase in customers through the doors is by far the best option.


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## lejogger (1 Jul 2011)

Norm said:


> This is true, unfortunately.
> 
> For those who don't pay higher rate tax), the savings on most schemes would be less than the 16.7% reduction if VAT was removed.



My company doesn't reclaim VAT, but the standard rate tax payers still save in the region of 30%... I can work out the exact figures if necessary, but 16.7% is nowhere near correct. 

This constant putting down of the scheme is very irresponsible


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## Norm (1 Jul 2011)

Last one from me, I'm repeating myself and that's breaking my #1 rule.



lejogger said:


> I'm not looking to provoke, or cause an argument... and the last thing I would want to do is give false hope to people expecting to 'buy' a bike rather than 'hire' a bike, but are there any actual recorded incidents where all things being equal, people have joined a cycle to work scheme but then after their final payment been prevented from taking ownership by their employers?
> I run our scheme on the understanding that the employees taking ownership is a natural progression of the scheme and can see no reason why the employee should ever not do so should they wish to.
> So while I understand the importance of ensuring people are aware of the potential risks, it seems that there is also an unnecessary level of scaremongering which is putting people off for no good reason.


Nothing to do with scaremongering but, as I said, many people don't have your level of understanding. 

What you said was wrong, I pointed that out, you agreed and yet you are still blathering on about it... whilst claiming that you aren't looking to cause an argument. 



lejogger said:


> The difference of which is important to whom? C2W bikes are not assets. They depreciate at such a rate that there is no point considering them such. The salary sacrifice, managed by control accounts ensure that the full value paid out is returned, so there is no need for them to be logged as assets, especially considering they are paid for and then recovered during the course of one financial year.


 The difference is important to the tax man. By your own admission, the simplified valuation method provides a residual value based on the original price of the bikes. The onus is, therefore, on the employers to ensure their systems record the original price to set the correct residual value.



lejogger said:


> I suppose this is a slightly moot point as our scheme would never let the employee purchase a bike that is more than £1k anyway - despite this being the whole point of this thread! But what I said still stands. Tax *IS *paid based on the residual value... however the residual value *IS* calculated based on the original price of the cycle. This however, is on the understanding that the maximum value of the cycle is £1k. I don't believe there is a clear answer on what should happen should the value be greater than this.
> So while you are totally correct in your quoting of what the HMRC guidelines say, it doesn't change the fact that the guidelines should probably be altered to accomodate what happens should an employee manage to get a more expensive bicycle, and also the fact that the HMRC guidelines are essentially that... guidelines, and that any decently structured explanation in the event of a tax investigation should clear anyone of excess tax charges in the same way that a person with a £1000 bike that had depreciated to a lower level than £250 after a year of cycling can argue a lesser final payment.


A change of tack and a straw man. My comment, which you originally contested, was that the valuation should be based on the original price.

I agree that there should be ways that the tax liability could be reduced but EIM21667a is not a set of guidelines, it is the HMRC laying out the way that the simplified valuation should be applied if it is appropriate.



lejogger said:


> I've not indicated that every scheme will - but at the same time there's no point continuing with the 'scheme-bashing' that in my opinion is totally unwarranted as 30% is probably the minimum that people can expect to save if their company operates one of the better schemes. Unfortunately most organisations are persuaded by the sales pitches of these smaller private sector organisations who sell the employer benefits over the employee benefits, causing them to forget that these companies need to operate at a profit, which comes right out of the savings the employees could be making. Running your own scheme, or going with a large national company happy with the increase in customers through the doors is by far the best option.


 With tax savings of 20% and employees NI savings of 11% / 12%, less a tax charge on the residual value of 3.6%, I would suggest the best schemes would struggle to 30% for most people, without potentially dubious practices relating to the VAT. But, your non-provocation veneer wears ever-thinner as I suggested savings of 25%-30% were to be expected and you argue that "30% is "probably the minimum". Agreeing with what I wrote and yet still producing a diatribe to do so is a tad unusual.

Accusations of scheme bashing are also bizarre. Your previous post agreed with me when I said they were worthwhile, so how you feel I have gone from saying that they are worthwhile (which is what I did) to scheme bashing (which isn't what I've done anywhere) is a bit of a mystery.

In summary, you agree that what I originally said (the simplified valuation is based on the original price) was correct and the rest is, well, apparently not being provocative or argumentative but I'm not sure what else it could be. 



lejogger said:


> My company doesn't reclaim VAT, but the standard rate tax payers still save in the region of 30%... I can work out the exact figures if necessary, but 16.7% is nowhere near correct.
> 
> This constant putting down of the scheme is very irresponsible


16.7% is exactly correct to calculate the effect of removing the VAT.


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## lejogger (2 Jul 2011)

Norm said:


> Last one from me, I'm repeating myself and that's breaking my #1 rule.
> 
> Nothing to do with scaremongering but, as I said, many people don't have your level of understanding.
> 
> What you said was wrong, I pointed that out, you agreed and yet you are still blathering on about it... whilst claiming that you aren't looking to cause an argument.


You may be repeating yourself, but you're doing so by not addressing the points that I have made. Yes I agreed that I should not have said 'your' bike, but I am certainly not 'blathering' on about anything by simply asking whether there is a justification for such a pedantic need to point out, and stick so rigidly to the worst case scenario that I can't find any reported cases of! 
Saying that you're repeating yourself and this will therefore be your last post may make you feel better that you've got your last word in, and that you can now walk off home with your ball under your arm, but you refuse to acknowledge the points I raise in my post. Labelling them as 'blathering' rather than addressing or agreeing with them is not helpful to the forum. This is a discussion where hopefully we can answer the point of the thread and contribute a reasoned conversation that will help the forum users understand the scheme. It's not an argument between you and I. 



Norm said:


> The difference is important to the tax man. By your own admission, the simplified valuation method provides a residual value based on the original price of the bikes. The onus is, therefore, on the employers to ensure their systems record the original price to set the correct residual value.


I would say that the company has a responsibility to collect the salary sacrifice and provide details of the benefit in kind passed onto the employee. If the HMRC wishes to investigate and challenge an individual for non payment of tax then that is very much between the HMRC and the individual. How is a company ever going to know that an employee has a £1500 bike if they have only ever been invoiced for £1k? Does a company representative need to accompany all staff to the bike shop?



Norm said:


> A change of tack and a straw man. My comment, which you originally contested, was that the valuation should be based on the original price.
> I agree that there should be ways that the tax liability could be reduced but EIM21667a is not a set of guidelines, it is the HMRC laying out the way that the simplified valuation should be applied if it is appropriate.


Ok... but we're clearly discussing here a scenario that in my opinion lives outside of any HMRC valuation table. It's an unusual situation where the taxable benefit is only being made on 2/3 of the value of the bike, so while it can be reasonably expected that you should only have to pay tax on the portion of the bike that earned the savings, and any decently prepared and well researched appeal should justify this, the fact remains that this approach to the C2W scheme is not recommended because of the confusion that surrounds it. I don't agree with it, wouldn't recommend it, and don't allow it... my comments on the matter are merely my view on how the tax should be collected in the result of this situation occurring. 



Norm said:


> With tax savings of 20% and employees NI savings of 11% / 12%, less a tax charge on the residual value of 3.6%, I would suggest the best schemes would struggle to 30% for most people, without potentially dubious practices relating to the VAT. But, your non-provocation veneer wears ever-thinner as I suggested savings of 25%-30% were to be expected and you argue that "30% is "probably the minimum". Agreeing with what I wrote and yet still producing a diatribe to do so is a tad unusual.
> Accusations of scheme bashing are also bizarre. Your previous post agreed with me when I said they were worthwhile, so how you feel I have gone from saying that they are worthwhile (which is what I did) to scheme bashing (which isn't what I've done anywhere) is a bit of a mystery.
> 
> In summary, you agree that what I originally said (the simplified valuation is based on the original price) was correct and the rest is, well, apparently not being provocative or argumentative but I'm not sure what else it could be.



My point here was to just emphasise that 25-30% is the minimum that should be expected providing the employer signs up to or creates a scheme which competes with the leading players - it can be over 50%. By again only focussing on the lower end, you portray a glass half empty attitude to the scheme that may mean people reading this forum may not realise that they could make substantially greater savings. 

A standard rate taxpayer with no VAT savings and a 25% residual value should save 27% - more monthly savings can be calculated if the employee pays into a pension or pays back student loan etc should these be calculated on gross pay. (although these are not true savings - but useful for calculating how affordable the scheme is for a monthly budget) Yes it can be worse than this should the company insist on a payment for the bike on top of the salary sacrifice, but also, most companies can relaim the VAT on the cost of the bikes. 

If you read back through my posts, I don't believe that you can prove grounds of provocation or find evidence of diatribe in the slightest. The tone of my posts has always been intended to discuss and contend the points raised in the thread, not to insult or argue or attack without reasoning. So yes I do agree with what you say in principle, but slightly object to your negative stance on a forum that intends to encourage people to take up and enjoy cycling, when I believe that this scheme is one of the best ways of achieving this.



Norm said:


> 16.7% is exactly correct to calculate the effect of removing the VAT.


Yes, a discount of 20% is a 16.7% reduction. I'll retract the statement and I apologise. I think it's just important to emphasise that this is on top of the tax and NI savings.


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## Norm (2 Jul 2011)

lejogger said:


> ...but you refuse to acknowledge the points I raise in my post. Labelling them as 'blathering' rather than addressing or agreeing with them is not helpful to the forum. This is a discussion where hopefully we can answer the point of the thread and contribute a reasoned conversation that will help the forum users understand the scheme. It's not an argument between you and I.


I think the only point was that you said that the bikes are always sold to the employees. I'm fairly certain that there was one instance reported on here where a chap paid in more and, at the end of the rental period, the boss kept the bike for himself but I didn't think it was important or relevant. You said "your bike", I said that word concerned me, because it isn't, you agreed, the rest is... well, choose your own word. 



lejogger said:


> My point here was to just emphasise that 25-30% is the minimum that should be expected providing the employer signs up to or creates a scheme which competes with the leading players - it can be over 50%. By again only focussing on the lower end, you portray a glass half empty attitude to the scheme that may mean people reading this forum may not realise that they could make substantially greater savings.


 The first scheme that I experienced, run by Balfour Beatty, would have resulted in net savings under 10%. With the issue of EIM21667a, many have been required to buy the bike for the 18% or 25% valuation, and they are only saving around 10% and would probably consider even 25%-30% as optimistic. 

I'm not focussing on the lower end, I'm recognising that most people are not higher rate tax payers and I'm still saying that schemes are worthwhile as they can realise savings of 25-30%. I could say that, depending on the scheme rules and personal circumstances, savings could be somewhere between nothing and 50%, but I consider it to be more useful to say that you could expect savings of 25%-30% because that is where, IMO, most people could end up. You again seem to acknowledge this, so I'm not sure how it is pessimistic. 



lejogger said:


> So yes I do agree with what you say in principle, but slightly object to your negative stance on a forum that intends to encourage people to take up and enjoy cycling, when I believe that this scheme is one of the best ways of achieving this.


 Negative? Read the stuff that I've written on CC exploding the myths, promoting C2W schemes, arguing against those who say they aren't worth it. 

Help me to spread your knowledge amongst those who have little or no idea what they signed up to, help me to explain the guidelines and the regulations, help me to advise people who want to set up and manage schemes of their own, but don't tell me that I'm being negative for saying that I still think that the schemes are worthwhile.


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## lejogger (2 Jul 2011)

Norm said:


> Help me to spread your knowledge amongst those who have little or no idea what they signed up to, help me to explain the guidelines and the regulations, help me to advise people who want to set up and manage schemes of their own, but don't tell me that I'm being negative for saying that I still think that the schemes are worthwhile.



Of course not, and I acknowledge that you are pro C2W. There was a post on here saying that they thought the schemes were a complete waste of time and this was definitely not you, but may have caused me some confusion in the numerous replies. 
It's a good thing that we're both clearly passionate about this, and obviously I'm happy to contribute to threads helping those who need clearer understanding. 

Lets just never talk about helmets, earphones or RLJing!!


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## APK (2 Jul 2011)

Are we not missing the point here with "residual value of the bike"? My understanding is that the C2W scheme effectively does not involve bikes, it involves vouchers which can then be exchanged for bikes, so if I get a £1,000 voucher, that is the only info the employer will get, and that is what they will base the residual value calculations on, if I chose to spend another chunk of my own money, they would not be aware?


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## Downward (2 Jul 2011)

Interesting stuff from HMRC. They state you pay fair market value on the bike but schemes charge you fair market value of the voucher.

Does this mean the schemes have now changed their minds with the fair market value ruling and what about the Final figure I paid on £700 voucher even though my bike was only £450 ?


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## lejogger (2 Jul 2011)

APK said:


> Are we not missing the point here with "residual value of the bike"? My understanding is that the C2W scheme effectively does not involve bikes, it involves vouchers which can then be exchanged for bikes, so if I get a £1,000 voucher, that is the only info the employer will get, and that is what they will base the residual value calculations on, if I chose to spend another chunk of my own money, they would not be aware?



The wording of the HMRC guidance states the residual value is calculated based on the original cost of the bike. In this way, Norm is correct in saying that if you follow this guidance you would expect to pay the residual value of the original full price of the bike. 

Where I think my opinion differs slightly from Norm is that I would state that your example of paying an additional £500 yourself would put you outside of the simplified valuation method... and there is no clear guidance as to what to do in your situation therefore writing to or visiting the HMRC and getting some clarification from a tax official is really the only thing you can do to know for sure. 

If you did nothing and paid a residual value on the basis of the voucher then you are leaving yourself open to investigation... which I believe you could most probably successfully appeal, but is a risk all the same.


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## lejogger (2 Jul 2011)

Downward said:


> Interesting stuff from HMRC. They state you pay fair market value on the bike but schemes charge you fair market value of the voucher.
> 
> Does this mean the schemes have now changed their minds with the fair market value ruling and what about the Final figure I paid on £700 voucher even though my bike was only £450 ?



All schemes should now be fully compliant with the new guidelines. I think the whole purpose of introducing them is because there was no blanket percentage attached to any of the schemes, so this brings about a bit more clarity. 
I'm not sure how you would stand now without some more detail about your scheme. Generally though the percentage paid was related to the original price of the bike but HMRC considered it to be too low as the real market value was a lot higher than the 5% - 10% generally used.


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## Norm (2 Jul 2011)

lejogger said:


> Of course not, and I acknowledge that you are pro C2W. There was a post on here saying that they thought the schemes were a complete waste of time and this was definitely not you, but may have caused me some confusion in the numerous replies.
> It's a good thing that we're both clearly passionate about this, and obviously I'm happy to contribute to threads helping those who need clearer understanding.


 



lejogger said:


> Where I think my opinion differs slightly from Norm is that I would state that your example of paying an additional £500 yourself would put you outside of the simplified valuation method... and there is no clear guidance as to what to do in your situation therefore writing to or visiting the HMRC and getting some clarification from a tax official is really the only thing you can do to know for sure.


 I'm not sure our opinion differs all that much. As I said previously, there are ways around it and completely avoiding the simplified method would be one, as would be, for instance, using the vouchers to buy the frameset and the "top up" to buy the wheels and drive train.



APK said:


> Are we not missing the point here with "residual value of the bike"? *My understanding is that the C2W scheme effectively does not involve bikes, it involves vouchers which can then be exchanged for bikes*, so if I get a £1,000 voucher, that is the only info the employer will get, and that is what they will base the residual value calculations on, if I chose to spend another chunk of my own money, they would not be aware?


You see, this is the sort of misinformation which we need to correct.

The C2W scheme has absolutely nothing to do with vouchers. Don't worry, APK, you are not alone as many people think that the "cyclescam-style" voucher scheme is the only option. They are not and they are a long way from being the best alternative. A C2W scheme can be set up and run very easily and, cyclescheme aside, most C2W scheme don't use vouchers. Your implementation, APK, might be about vouchers but that is just one (very poor, IMO) alternative.

And, fundamentally, a scheme operated under the Cycle to Work Scheme regulations is and must be, all about your employer renting bikes to you for a fixed sum and a fixed period.


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## killiekosmos (2 Jul 2011)

I got a bike via C2W before HMRC issued the simplified valuation guidance. I was thinking about getting another one but it is less beneficial with the residual value to pay.

By my estimates my employer could show a profit from C2W. 

I rent a bike from my employer over a year and I pay the value of the bike back to my employer over 12 months. I save on tax, NI and emplyer gets his initial outlay back. I then have to pay the residual value, so this eats into my savings (tax and NI) but gives my employer a profit on the transaction.

I was planning to suggerst to my employer that he could consider (not commit) giving the bike away at end of year to the member of staff renting it and let the member of staff declare a benefit in kind to HMRC (and pay tax on the notional residual value).

This way, employer gets initial outlay back but employee makes greater savings and so could encourage more users.

Does this make sense? Is it allowable? Does anyone do this already?


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## Norm (2 Jul 2011)

killiekosmos said:


> Does this make sense? Is it allowable? Does anyone do this already?


Yes, I think that there are even several references to schemes which do this on this thread.

The employer does profit. Depending on the exact scheme details, they save 13.8% of the sacrificed salary through employers' NI savings, 16.7% through VAT that they can reclaim, they get the whole of the VAT inclusive value of the bike back from the employee through the rental payments and they then claim up to 25% through selling the bike at the end of the rental period.

But I have no issue with that. The other side of the deal is that the employer has to set up a scheme, including ensuring that it complies with the regulations and having someone who keeps up-to-date with changes, deal with whining employees who don't like the scheme (there will be someone who complains, no matter what the scheme rules are), they have to track the bikes as they do other company assets, make an up-front, lump-sum payment, fund an interest free loan, face the risk of the employee doing a runner or getting the bike nicked and the potential headache of selling a second hand bike which has been abused through the rental period.


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## lejogger (2 Jul 2011)

killiekosmos said:


> Does this make sense? Is it allowable? Does anyone do this already?



+1 for everything Norm says. 
This is what I persuaded our Director of Finance to do and it was no issue to him at all. They miss out on the 5% payment that would have been made had the 'old system' still been in place, but it's peanuts to an organisation like ours. The only downside was that I had persuaded him to use the profits from the disposal fee to fund facilities improvements for staff cycling to work - showers, storage etc, and now we don't have this funding in place... but probably a worthwhile sacrifice to keep the cost of the scheme down.


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## tradesecrets (2 Jul 2011)

I seen an advert in MBUK that a retailer was willing to sell bikes on the C2W over the Grand limit .. 


whilst i myself have always believed that the true limit is a grand .. it's kinda confusing


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## lejogger (2 Jul 2011)

tradesecrets said:


> I seen an advert in MBUK that a retailer was willing to sell bikes on the C2W over the Grand limit ..
> 
> 
> whilst i myself have always believed that the true limit is a grand .. it's kinda confusing




If you're tempted, it's probably worth reading this thread through fully... you'll see that it's possible, but not recommended and potentially complicated.


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## Norm (2 Jul 2011)

lejogger said:


> If you're tempted, it's probably worth reading this thread through fully... you'll see that it's possible, but not recommended and potentially complicated.



 That's a good summary. 

Another option is to get a job for company which has had a consumer credit licence issued by the OFT. That might be a bit extreme, though.


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## killiekosmos (3 Jul 2011)

Norm said:


> , they get the whole of the VAT inclusive value of the bike back from the employee through the rental payments and they then claim up to 25% through selling the bike at the end of the rental period.



Can I check this with you? I thought on my previous bike I pad back, over 12 installments, the cost of the bike ex VAT as my employer (a publc authority) can rclaim VAT

Thanks for the other comments.


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## Norm (3 Jul 2011)

killiekosmos said:


> Can I check this with you? I thought on my previous bike I pad back, over 12 installments, the cost of the bike ex VAT as my employer (a publc authority) can rclaim VAT
> 
> Thanks for the other comments.


You are on one of the more friendly schemes, then.  

The rules can be interpreted like that, although they suggest elsewhere that it should be the gross value, I don't think that it has ever been tested in court either way. 

I think that most schemes work on the gross, as the schemes are set up by the employers so they'll lose twice over if HMRC do get pedantic and rule the repayments should be based on the gross value.

Say thanks to your scheme administrators when you see them next, Killie.


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## doogle84 (14 Aug 2011)

Norm said:


> That's a good summary.



Thanks for all the help. However, if the summary above is on the button, given I've not got time to weigh up the pros and cons I may take the easy option and find something for sub 1k. 

I've just got back off holiday and discovered I have only 10 days to finalise the purchase details - this is part of our annual "flexible benefits" process limited to a very inflexible 3 week "nomination period"!

I think I'll be starting off a new thread to track down a sub 1k Fratello substitute from a Cyclescheme retailer...


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## BenScoobert (4 Mar 2012)

I hate to awaken an old thread, but starting a new one just creates another.
My c2w scheme is at an end, I have a letter from a company called LHE Professions (not my employer) stating they will take the hmrc recommended value if I don't respond within a few days. ie £250 of my original £1000 bike

However my scheme started before this new pricing change and my contract says:
What happens when I have finished the payments?
You may be able to start a new scheme with a more up to date bicycle, if your employer wishes to implement a new
scheme.
• The bicycle and equipment can be returned or collected for a small collection fee.
• Your employer may have the opportunity to sell the bicycle and equipment at the end of the scheme at fair market
value. Currently fair market value is estimated to be a nominal sum not exceeding the amount
of one month’s salary sacrifice.

Any ideas where I stand on this?
I don't see how they can take more than 1 month's payment as I have a contract.


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## Altus (4 Mar 2012)

I think you are still liable for the final valuation fee as it only says that the value is estimated. However other cycle to work providers have been giving people the option to extend their scheme by another 3 years reducing the liability. Contact LHE and see if they also offer this option. Should reduce the amount payable to 7% if they do.

"Your employer may have the opportunity to sell the bicycle and equipment at the end of the scheme at fair market
value. *Currently fair market value is estimated* to be a nominal sum not exceeding the amount
of one month’s salary sacrifice." 

Employers weren't permitted to give a set value of your bike at the end of the term.


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## lejogger (4 Mar 2012)

BenScoobert said:


> I hate to awaken an old thread, but starting a new one just creates another.
> My c2w scheme is at an end, I have a letter from a company called LHE Professions (not my employer) stating they will take the hmrc recommended value if I don't respond within a few days. ie £250 of my original £1000 bike
> 
> However my scheme started before this new pricing change and my contract says:
> ...


 
The problem you have is that the rules changed with regards to what a fair market value is, and it applied to all existing schemes, not just the ones starting up after the change.
Most companies have found ways around this however either by extending the hire period, or letting you pay tax on the difference between the HMRC market valuation and what you actually pay to take ownership.
What other options have LHE Professions given you apart from to pay the FMV?


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## lejogger (4 Mar 2012)

BenScoobert said:


> I hate to awaken an old thread, but starting a new one just creates another.
> ...LHE Professions...


 
Just had a look at their website... the only options they seem to give are to return the bike or pay full FMV. I'm sure they're not the only ones doing this, but most of the bigger companies running the scheme have at least made an effort to change the way the scheme works to maximise the savings to the employee. 
If that is the case, then you may be tied in to paying (if you want to keep the bike) - unless you can prove that the value of the bike is less than what they're asking. I hope I'm wrong.

Yet another example of why the scheme should NOT be outsourced to these small profit-making companies, whose only interest is maximising their profit from the savings we're entitled to.


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## BenScoobert (5 Mar 2012)

It seems they are in for a fight, this has thorough pi$$ed off a decent chunk of our work force. Looking at my original contract which is between my employer and myself with wheelies direct cycle solutions ltd as the 3rd party bike provider, there is no mention of this LHE professions outfit and as far as I can see I have no contract with them.
Seeking legal advice tomorrow morning via the union. Time to be a militant train driver type I think.


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## Norm (5 Mar 2012)

BenScoobert said:


> Time to be a militant train driver type I think.


 It was probably legally ok for the employer to sell the bike to LHE Professions but morally, that's pretty poor.

I see LHE Professions are linked to Close Brothers... good luck with that!

I also see that LHE Professions say that they offer a "Rolls Royce" service. I wonder what Rolls Royce would think of being linked like that. If you also wonder what Rolls Royce would think of being linked like that, you could let Rolls Royce know through their contact form.


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## 400bhp (5 Mar 2012)

Norm said:


> It was probably legally ok for the employer to sell the bike to LHE Professions but morally, that's pretty poor.


 
The employer should have at least told their employees they were doing this. Very poor employee relations.

My employer has "sold" our scheme to Evans cycles, where the original vouchers (not the scheme) were from.


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## wiggydiggy (5 Mar 2012)

BenScoobert said:


> <SNIP>


 
I'm not the expert on this type of C2W scheme (lesson learnt Norm!) but.....

Was it not a condition of the tax changes introduced that they could not be backdated? E.g. if your scheme was already running the 'old' tax rules would apply?


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## 400bhp (5 Mar 2012)

wiggydiggy said:


> I'm not the expert on this type of C2W scheme (lesson learnt Norm!) but.....
> 
> Was it not a condition of the tax changes introduced that they could not be backdated? E.g. if your scheme was already running the 'old' tax rules would apply?


 
No


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## wiggydiggy (5 Mar 2012)

400bhp said:


> No


 
Thats a real shame, is there not some sort of legal comeback on that ie your contract has been changed after you sighned it?


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## Norm (5 Mar 2012)

wiggydiggy said:


> I'm not the expert on this type of C2W scheme (lesson learnt Norm!) but.....


 Who is? It seems that even HMRC and DfT have argued about it in the past.  



wiggydiggy said:


> Was it not a condition of the tax changes introduced that they could not be backdated? E.g. if your scheme was already running the 'old' tax rules would apply?


 I think (from memory) that related only to the clarification about the VAT treatment. It has always been a condition of the scheme that you *cannot* fix the selling price at the start of the scheme as that turns it from a hire scheme to a hire purchase scheme, and that would be specifically excluded under the rules.

The issue is all about the contract which hasn't changed. The contract says, as Altus pointed out, "*Currently fair market value is estimated* ". It could be argued that, because it is a requirement of the scheme that the bikes are sold at "fair market value", that even the 25% which HMRC recommend isn't fair market value - how many bikes which cost £1000 a year ago are selling now in good condition at £250?


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## wiggydiggy (5 Mar 2012)

Norm said:


> Who is? It seems that even HMRC and DfT have argued about it in the past.
> 
> I think (from memory) that related only to the clarification about the VAT treatment. It has always been a condition of the scheme that you *cannot* fix the selling price at the start of the scheme as that turns it from a hire scheme to a hire purchase scheme, and that would be specifically excluded under the rules.
> 
> The issue is all about the contract which hasn't changed. The contract says, as Altus pointed out, "*Currently fair market value is estimated* ". It could be argued that, because it is a requirement of the scheme that the bikes are sold at "fair market value", that even the 25% which HMRC recommend isn't fair market value - how many bikes which cost £1000 a year ago are selling now in good condition at £250?


 
No worries cheers

Where does that leave BenScoobus then?

If it was me I'd pay the £250, keep the bike and not take up another C2W scheme through this company? Reason being its still a saving(ish) on the £1000 cost and it seems silly to give the bike back after paying all that £££ for it already?


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## Soltydog (5 Mar 2012)

I'm in same boat as BenS  Our company keeps the reclaimed VAT, so our only savings are tax & NI, approx 32% saving. The bike value could now be 21% + VAT, making a massive 7% saving in total, whilst the company has made 33.8% & then whatever slice of the final value they take = Greedy bar stewards  We have to make a decision on whether to keep the bike or not by 14th March, but as of yet we do not know what we have to pay???? How can you make a decision without all the facts?


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## BenScoobert (5 Mar 2012)

It seems LHE take the 21% as a maximum, ie. hardly ridden pristine condition and serviced professionally in the last month. Unfortunately my bike cannot be put into that category and they have revalued it at £54.70 in its current state.


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## wiggydiggy (5 Mar 2012)

BenScoobert said:


> It seems LHE take the 21% as a maximum, ie. hardly ridden pristine condition and serviced professionally in the last month. Unfortunately my bike cannot be put into that category and they have revalued it at £54.70 in its current state.


 
Where does that put you? As a purchase is it still worth it?


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## BenScoobert (5 Mar 2012)

wiggydiggy said:


> Where does that put you? As a purchase is it still worth it?


 
It is near the amount I expected to pay had the original agreement been honoured, so yes it was still worth the purchase for the discount but I'd rather not have the shock added on for free.


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## lejogger (5 Mar 2012)

wiggydiggy said:


> No worries cheers
> 
> Where does that leave BenScoobus then?
> 
> If it was me I'd pay the £250, keep the bike and not take up another C2W scheme through this company? Reason being its still a saving(ish) on the £1000 cost and it seems silly to give the bike back after paying all that £££ for it already?


 Yes... but also make sure you go to HR/Finance, highlight the problems that have arisen and get them to cancel/not renew any contract they have with them for the sake of another company ditching what can be a very worthwhile scheme if run well.


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## lejogger (5 Mar 2012)

BenScoobert said:


> It seems LHE take the 21% as a maximum, ie. hardly ridden pristine condition and serviced professionally in the last month. Unfortunately my bike cannot be put into that category and they have revalued it at £54.70 in its current state.


 I guess that's worked out ok for you then... That price is certainly in the region of what should have been expected when the agreement started. Still doesn't stop it being an arse for anyone who has managed to keep the bike in excellent condition though and will have to foot a heftier bill.


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## BenScoobert (5 Mar 2012)

I mentioned that I thought people who looked after their bikes were penalised and she said they expect a person to look after a bike, but the big price dropper is the professional servicing, I couldn't possibly recommend anyone being lenient with the truth when described their own bike though.


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## 400bhp (5 Mar 2012)

BenScoobert said:


> It seems LHE take the 21% as a maximum, ie. hardly ridden pristine condition and serviced professionally in the last month. Unfortunately my bike cannot be put into that category and they have revalued it at £54.70 in its current state.


 
Interesting - did you take it to them to be valued?

what was the original purchase price of the bike?


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## BenScoobert (5 Mar 2012)

400bhp said:


> Interesting - did you take it to them to be valued?
> 
> what was the original purchase price of the bike?


No, just sent 2 photos and filled in the 3 questions they asked.


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## 400bhp (5 Mar 2012)

What was the original purchase price? Anything northwards of £500 and I would say you did extremely well.


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## lejogger (5 Mar 2012)

400bhp said:


> What was the original purchase price? Anything northwards of £500 and I would say you did extremely well.


 I think the OP stated the original cost of bike was £1k... the boy did good.


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## Norm (5 Mar 2012)

wiggydiggy said:


> Where does that leave BenScoobus then?


It seems that Ben is sorted because his bike is in "poor" condition. 



BenScoobert said:


> I couldn't possibly recommend anyone being lenient with the truth when described their own bike though.


Of course not. No-one would recommend that, would they.


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## BenScoobert (6 Mar 2012)

It is a £1000 2010 croix de fer


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## Soltydog (6 Mar 2012)

My final figure is higher than I was expecting/quoted when I started the scheme 18months ago, but as I service it myself & it has never been professionally serviced & i ride it regularly it was valued lower than the top end figure  .
There's a couple of people in our scheme who have had the bikes stolen at some point & were not insured, so they are unable to take photos & complete the valuation, so they may end up paying 17-21% valuation?


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## wiggydiggy (6 Mar 2012)

Soltydog said:


> My final figure is £84  Could have been worse I suppose. I couldn't say mine was in poor condition though as the camera doesnt lie  I've still made a 35% saving on the RRP, but some of that is down to getting a £1200 bike for £1000 in the first place.
> There's a couple of people in our scheme who have had the bikes stolen at some point & were not insured, so they are unable to take photos & complete the valuation, so they may end up paying 17-21% valuation?


 
Glad to hear the value has worked out ok on yours and Ben's, could have been better yes but definately now try to influence HR to change schemes.

For those that get the bike stolen, I think you still have to pay at their valuation?


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## 400bhp (6 Mar 2012)

lejogger said:


> I think the OP stated the original cost of bike was £1k... the boy did good.


 
Yes! I think I might give Evans a call - get my tatty looking CAAD 9 valued


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## Norm (6 Mar 2012)

Whilst I'm sure that those who have got low valuations are happy and probably feeling a little boastful, can I suggest people don't post it on line.

Firstly, I don't care what a valuer says, a bike doesn't drop from £1k to £50 in a year.

Secondly, as with the other loopholes which have been closed (the original "one month's contributions" valuation and the VAT), when HMRC find out that people are taking the piss and posting about it, they will do something about it.


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## Leodis (7 Mar 2012)

I took the CS out in Jan and though I knew the new changes does this affect the final value? I got a £900 bike and so will end up paying £225 to take ownership of it, can I request a revaluation of the bike?

Think I will take the 7% extension and flog the thing and take out a new CS.


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## lejogger (7 Mar 2012)

Leodis said:


> I took the CS out in Jan and though I knew the new changes does this affect the final value? I got a £900 bike and so will end up paying £225 to take ownership of it, can I request a revaluation of the bike?
> 
> Think I will take the 7% extension and flog the thing and take out a new CS.


 Everyone who has a new or existing scheme on the go will be liable to the final payment changes. It was only the VAT changes that allowed for existing schemes to run their course.

I take it your scheme is with CycleScheme? I think they have a couple of better options than the OP originally thought he had. I think most are taking the extension rather than paying the full whack. The extension allows CycleScheme to retain ownership for longer which in turn ensures that the residual value is less when the transfer does eventually happen.

Im not totally clued up on the details of how long the extension is or by how much the residual value will drop by for your particular scheme, but I would imagine that taking the extension is definitely the way to go. I think it's something like 5 or 6 years until the bike will have a 0% residual value however.


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## Leodis (7 Mar 2012)

Thanks Lejogger, I think it is extended by 3 years with 7% payment and after that the bike is basically yours or you can hand it to them or receive the 7% back, though I doubt they would say anything. Reason is I probs will take another scheme next year for a road or cross bike and don't have room for two bikes. We see.


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## Soltydog (7 Mar 2012)

wiggydiggy said:


> Glad to hear the value has worked out ok on yours and Ben's, could have been better yes but definately now try to influence HR to change schemes.


WIth it being a TOC & they only have a couple of years left of the franchise, I'm not sure if they will run the scheme again & even if they do they will be unable to have an extended loan period after this time, so will end up with higher valuations. I dont need another bike anyway, although need & want is different


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## Soltydog (7 Mar 2012)

Norm said:


> Whilst I'm sure that those who have got low valuations are happy and probably feeling a little boastful, can I suggest people don't post it on line.
> 
> Firstly, I don't care what a valuer says, a bike doesn't drop from £1k to £50 in a year.
> 
> Secondly, as with the other loopholes which have been closed (the original "one month's contributions" valuation and the VAT), when HMRC find out that people are taking the piss and posting about it, they will do something about it.


 
Point taken, Norm. I wasnt being boastful or taking the piss. I've ended up paying a little more than I expected when the scheme started 18 months ago. I'll edit my earlier post 
IMHO there are bigger tax loopholes being exploted that HMRC should put there efforts into stopping


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## lejogger (7 Mar 2012)

Leodis said:


> ...and don't have room for two bikes...


 
 cough... splutter... what???!

Everyone has room for at n+1 if they try hard enough... I mean how much do you really NEED that wardrobe, and how often do you ACTUALLY sit on that sofa? Get a turbo trainer and you can just sit on the bike in front of the telly


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## Norm (7 Mar 2012)

Soltydog said:


> IMHO there are bigger tax loopholes being exploted that HMRC should put there efforts into stopping


Can't dispute that one... but they've got form on the C2W stuff and it's easier to take a few pennies from people who are trying to do the right thing than it is to take back the billions from those who screw around intentionally.


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## Nebulous (7 Mar 2012)

I've read most of this thread - though I confess not it all, but I've just had an email from work saying we are signing up to cyclescheme.

It's a bit of a surprise, though it was talked about a while ago, but it could well be a route to a new bike.

I've a bit of reading, and a bit of thinking to do!


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## User16625 (9 Mar 2012)

Norm said:


> The danger during the period of the rental contract is that you have essentially given the money to your employer, on the expectation that they will sell you the bike at the end of the rental contract. They might not. They might sack you and a vindictive manager might decide to keep the bike. You have no redress.
> 
> .


 
fark that!! My previous employer would refuse to supply me PPE when I needed it and only provided it after a ridiculous period of time, forcing me to buy it myself (this is actually illegal, but im not a copper). Even if they did do a c2w scheme, it would take a right stupid git to bother with it. Glad I payed for my bikes off my own back.


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## redcard (9 Mar 2012)

Nebulous said:


> I've read most of this thread - though I confess not it all, but I've just had an email from work saying we are signing up to cyclescheme.
> 
> It's a bit of a surprise, though it was talked about a while ago, but it could well be a route to a new bike.
> 
> I've a bit of reading, and a bit of thinking to do!


 
Think of it as in interest-free loan. The tax savings are a bonus!


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## Soltydog (9 Mar 2012)

redcard said:


> Think of it as in interest-free loan. The tax savings are a bonus!


 
With the new HMRC guidlines basic tax payers will only end up saving around 7% You could probably negiotiate that discount yourself & if you want interest free credit, there's normally plenty of credit cards offering 0% on purchases


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## lejogger (9 Mar 2012)

Soltydog said:


> With the new HMRC guidlines basic tax payers will only end up saving around 7% You could probably negiotiate that discount yourself & if you want interest free credit, there's normally plenty of credit cards offering 0% on purchases


Some schemes offer very small discounts... others don't. Mine for example still offers savings of between 30% and 50% depending on your taxation circumstances.
 Don't knock them all when in some cases there are some excellent savings to be made


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## paulw1969 (10 Mar 2012)

lejogger said:


> Some schemes offer very small discounts... others don't. Mine for example still offers savings of between 30% and 50% depending on your taxation circumstances.
> Don't knock them all when in some cases there are some excellent savings to be made


 
My employer currently only provides the simple £500 i year ?bike loan, do you still think it is worth us pushing for C2W? i Have read most of this thread but tax incentives are not my strong point so can you perhaps recommend/clarify what we would ideally want the scheme to be based on i.e. would you say we would need the bike to be gifted at the end of say the third year etc to really make a difference to normal rate taxpayers? I ask as i think my employer is looking into C2W


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## Altus (10 Mar 2012)

paulw1969 said:


> My employer currently only provides the simple £500 i year ?bike loan, do you still think it is worth us pushing for C2W?


 
The answer is probably yes. If you go to the cyclescheme website for example you can key in your earnings and purchase price of bike and it'll work out cost of bike during first year. Then you just have to consider the final valuation fee which as long as the scheme provider chosen by your company offers the 3 year extension should reduce final price to a suitable amount to still save a good amount on purchasing a new bike for commuting. How much you save really depends on your tax rate. Some retailers are now also offering sale bikes on C2W (Evans) so you could get a good deal on a 2011 bike and see very good savings on an already discounted bike.


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## lejogger (10 Mar 2012)

paulw1969 said:


> My employer currently only provides the simple £500 i year ?bike loan, do you still think it is worth us pushing for C2W? i Have read most of this thread but tax incentives are not my strong point so can you perhaps recommend/clarify what we would ideally want the scheme to be based on i.e. would you say we would need the bike to be gifted at the end of say the third year etc to really make a difference to normal rate taxpayers? I ask as i think my employer is looking into C2W


The key is making sure that your employers are happy to foot the cost of the bill for the bikes initially rather than sourcing this out. If they own the equipment then when it comes to selling them to you at the end of the hire agreement they're more likely to do so to ensure that they break even rather than make a profit.
For me, the ideal scheme allows your company to buy the bike.. you pay them back over 12 months in the form of rental payments, (minus tax savings) and then they gift you the bike after 12 months. They have recouped what they have paid out and you have only paid back the value of the bike but made significant income tax and NI savings.

You would then only be liable for a tax bill on the difference between the HMRC residual value and what you paid (i.e. nothing) on a £1000 bike, this works out as around £50 off your tax code.


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## Norm (10 Mar 2012)

lejogger said:


> If they own the equipment then when it comes to selling them to you at the end of the hire agreement they're more likely to do so to ensure that they break even rather than make a profit.


This would appear to be the best solution which has been offered to date but there is one thing that I can't figure out.

If a third party were to buy the bikes, the could, I believe, give the bike to the renter at the end of the rental period and no tax liability would be incurred, as long as there was no contract between the employee, employer and third party to say that the bike will be given away, then the gift from the third party would not arise from employment so... well, so I don't think it would incur a schedule E liability.

I'm not certain enough to try it, though.


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## paulw1969 (10 Mar 2012)

^^^thanks folks, food for thought, i work for the Crown so hopefully (dependant on what they offer) might be worth look for some people.


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