Company wants damaged c2w bike back.

[Norm]

You mean the *employer* will have a tax liability.

No, because I would have written "the employer will have a tax liability" if I had meant that.

 

[Red Light]

If your employers let you buy it, be grateful. If you don't pay the full amount required in the HMRC document linked above, you will have a tax liability too.

Is the wrong answer. You can take the simplified approach offered by HMRC which is to use the figures in the table or you can do it the normal way which is based on the fair market value of the bike. In normal circumstances the two might come up with similar answers but when the bike is damaged, its fair market value drops significantly so the OP would benefit from going the valuation route.

 

[Norm]

Is the wrong answer.

For a "red" light, you are surprisingly black and white at times.

The OP suggested that ALIBACKROW was not keen to admit that the bike had been trashed, so he might not want to go the valuation route.

And the company were initially reluctant to sell the bike, so they might well expect ALIBACKROW to repair the bike before the valuation. Why should they lose out on the revenue from an ex-employee, after all?

 

[abo]

My experience is that this is only allowed by a small number of schemes.

Ah thought that was the standard for schemes, reading around. Thanks for the correction

 

[Norm]

Ah thought that was the standard for schemes, reading around. Thanks for the correction

No worries. It's the ideal but, sadly, not all schemes offer that. Larger schemes seem to be more rigid, the smaller ones, which may have been started by someone who has a vested interest are more likely to offer that option.

 

[JonnyBlade]

It's my impression that the bike belongs to the company, not to you and that you "hire" it during the payback period

So if it gets broken it is not your problem, essentially

At the end of the period of payback you are supposed to buy it for a "realistic" price from the company. When c2w first started most people just paid a fiver and that was that. But more recently the taxman has taken an interest and now it is a percentage of the value of the bike, I forget the exact recommended numbers

My understanding is that you purchase it for a percentage of what you paid. Normally around 7 or 8% of the value. If you have to pay market value for a year old bike you might as well have paid for it outright in the first place

 

[ufkacbln]

It's my impression that the bike belongs to the company, not to you and that you "hire" it during the payback period

So if it gets broken it is not your problem, essentially

At the end of the period of payback you are supposed to buy it for a "realistic" price from the company. When c2w first started most people just paid a fiver and that was that. But more recently the taxman has taken an interest and now it is a percentage of the value of the bike, I forget the exact recommended numbers

You are responsible for the care, and maintenance whilst you use the bike.Technically the Company can ask for it to be repaired by you (at your expense) to a standard expected of a bike of this age.

 

[Norm]

**breath in... and relax...**

My understanding is that you purchase it for a percentage of what you paid. Normally around 7 or 8% of the value. If you have to pay market value for a year old bike you might as well have paid for it outright in the first place

Your understanding is wrong.

That was how some schemes put it into practice but anyone not paying market value (or, more recently, using the HMRC guidelines) will incur themselves a tax liability as it is considered a benefit in kind.

 

[Red Light]

For a "red" light, you are surprisingly black and white at times.

The OP suggested that ALIBACKROW was not keen to admit that the bike had been trashed, so he might not want to go the valuation route.

And the company were initially reluctant to sell the bike, so they might well expect ALIBACKROW to repair the bike before the valuation. Why should they lose out on the revenue from an ex-employee, after all?

Ah but the Red Light is always behind everyone else, especially as he hasn't read all the thread

But do you think his employer knows the market value of the bike though? For a long time most of them were happy with £5 or £25 until HMRC told them bikes were actually worth quite a bit more than that second hand.

Edit addition: Have read the full thread now and your response was in reply to him having agreed a nominal sum with his employer so why would he be reluctant to get a valuation for a nominal sum to go with it? It doesn't need to say its wrecked on the valuation, just that its in poor condition.

 

[Angelfishsolo]

Ah but the Red Light is always behind everyone else, especially as he hasn't read all the thread

But do you think his employer knows the market value of the bike though? For a long time most of them were happy with £5 or £25 until HMRC told them bikes were actually worth quite a bit more than that second hand.

Edit addition: Have read the full thread now and your response was in reply to him having agreed a nominal sum with his employer so why would he be reluctant to get a valuation for a nominal sum to go with it? It doesn't need to say its wrecked on the valuation, just that its in poor condition.

Wouldn't the valuer state the condition of the bike?

 

[henshaw11]

There's no valuer AFAIA - on the assumption that the bike's kept in good useable condition (probably in the terms/conditions) then it's also reasonable to assume it'll have certain %age value at 12 months (which I think is now 25%, and drops with every additional year) - that probably means there's no getting away with it. It's probably worth adding that HMRC would be giving the *company* grief, not the individual, so it's not in the companies interest to merrily ignore it.

 

[Red Light]

There's no valuer AFAIA - on the assumption that the bike's kept in good useable condition (probably in the terms/conditions) then it's also reasonable to assume it'll have certain %age value at 12 months (which I think is now 25%, and drops with every additional year) - that probably means there's no getting away with it. It's probably worth adding that HMRC would be giving the *company* grief, not the individual, so it's not in the companies interest to merrily ignore it.

That, as I pointed out to Norman, is incorrect. The percentage of purchase price table is what they call a simplified valuation but you can still do it the old way of using the true fair market value. In fact HMRC are clear what evidence they expect you to be able to provide if you use don't use the tables and go with a lower fair market valuation and they query it:

• If employers chose to use lower values, it would remain open to HMRC to challenge these and the employer or employee (as appropriate) would need to be able to provide evidence in support of these values i.e. to demonstrate that the employee could have realised no more than these sums from sale or disposal of the cycle. We would expect evidence of a lower value to include:

• • a photograph of the cycle demonstrating its condition along with a description of any important aspects of its condition that are not evident from photographic evidence,
  • broad details of the extent of usage of the cycle (which can vary considerably even between cycles that meet the “qualifying journeys” main use condition for exemption), and
  • contemporaneous evidence of the amount for which that type of cycle in that sort of condition would have realised in a private sale and in a sale to a cycle retailer.