C2W, disagreeing with employers calculations

[Rubber Bullets]

I've recently finished the scheme (YAY), and I'm a lower rate tax payer as I don't get paid enough ;-)

Borrowed £1000 (seemed silly not to), payslip mentions £70.92 per month (x12 = £851.04) as salary sacrifice.
Paid 5% to transfer ownership = £50.

So total paid £901.04 meaning I saved a huge!!! £98.96
Not sure what impact that has had on the tax / NI, hopefully something as otherwise it's not much of an incentive! Apart from the fact you don't need to save up or take out a loan.

If I was to buy another bike then I'd probably go second hand!

Even if that was the worst case scenario it really doesn't look that bad. You get an interest free loan on a £1k bike, with no deposit to pay and you actually only need to pay back £900 not the full thousand. Most people would feel pretty good about that.

Don't underestimate how much the tax break is saving you, at a basic 20% rate you are saving a further £14 per month or £168 over the year, and I don't understand the NI rates but this would save you another few quid a month too (perhaps £6 - £10? hopefully cleverer people than me can say).

I don't think you need to be going for the second hand bikes just yet

RB

 

[Norm]

Borrowed £1000 (seemed silly not to), payslip mentions £70.92 per month (x12 = £851.04) as salary sacrifice.

As has been pointed out, the payslip will show the gross amount as that is the amount of salary which has been sacrificed. You should be taking 25% (approx, exact figures depend on personal circumstances) from that figure to see what it has cost you in take-home pay.

However, I'm concerned about...

Paid 5% to transfer ownership = £50.

If "recently finished" means since August last year, and you only paid £50 to transfer ownership, that is some way below the HMRC requirements and you almost certainly now have a tax liability on a benefit of £200. (HMRC guidelines say final price should be 25% for bikes over £500 at 12 months old).

That gives you three options, IMO.

1. Include the benefit on your tax return (it'll "only" cost you £40 as a lower rate tax payer)
2. Prepare a bunch of evidence why a bike which cost your employer £1000 is now worth £50 (and don't even think about quoting scheme rules here, HMRC trumps whatever you think they are worth)
3. Hide your head in shame because you have committed tax evasion

I'd pay the £40 and remain honest, because I'd lose my job and a professional qualification which I spent 10 years working for if I was convicted of tax fraud.

Note that the above is not intended to be taken as advice, just my initial ponderings and what I would do assuming accuracy in the very limited information provided.

 

[Wankelschrauben]

I picked up a second hand bike yesterday instead, the guy has lent it to me for a day so it isn't paid for yet, I would go so far as to say this bike is superior to the Specialized Alez Sport I wanted from the C2W.

 

[Jezston]

What is it?

 

[Wankelschrauben]

https://www.cyclechat.net/

It is an Italian framed road racing bike. So much lighter than my old steel racer.

 

[MacB]

I'd like to see how the employers can charge interest (which makes it a loan) when the regulations make it very clear that the scheme must be to rent the bikes to the employee.

I made considerable savings when I got my CTW scheme bikes.

The savings are there but I just think people make assumptions around the savings without checking the small print, shopping around and doing the math. Things like buying this years model at full retail for £1k including some bits when a cash deal could get you last years model/ex demo at £6-700. That's maybe a bit extreme as an example and requires you know exactly what you want and that there are deals around on the size you need, but it's not impossible. Or if you have the dosh then see what you can get, poss older model again, if you spend a full £1k. It depends on your choice of shop as well.

 

[Norm]

Indeed, more so this year than last as currency movements mean some 2011 models seem to be around 20%-25% higher than the 2010 equivalents.

 

[MacB]

Indeed, more so this year than last as currency movements mean some 2011 models seem to be around 20%-25% higher than the 2010 equivalents.

I was perusing groupsets the other night and one of my searches popped up a Tiagra one from 2006, it was £150 for the whole groupset. So some stuff has more than doubled in 4-5 years, you pay that much just for the Tiagra STI levers on their own now.

 

[jugglingphil]

APK, Rubber Bullets, Norm
Indeed figures are gross. Netted out the saving is better, paid about £670 over 12 months. So a pretty good deal.

Norm, agreed the govt did change the rules part way through the scheme which means I'll likely be choosing option 3 then 1

 

[jugglingphil]

I picked up a second hand bike yesterday instead, the guy has lent it to me for a day so it isn't paid for yet, I would go so far as to say this bike is superior to the Specialized Alez Sport I wanted from the C2W.

Very nice bike. Do the costs to work out the same?

 

[Wankelschrauben]

Buying 2nd hand I got a decent bike for a lot less than I would have had I bought new.

I must say, looks wise the Allez Sport Compact I was interested in is prettier with it's glossy white finish, however the weight, speed and basically everything else, this bike has it hands down.