CTW scheme, how successful

[jethro10]

Got my CUBE Ltd Team MTB last year and saved about £300. Thinking of getting a CUBE Attempt this year to replace my Giant Defy 3. So works for me ! Quite a few at our place do it, not sure how many commute. Many don't and use them mainly for leisure, but if it gets people cycling one way or another , it's all good ! Nobody checks if you commute, bonus !

Well this was actually one of the problems we were discussing.
People cheating the system and thinking it was ok.
Lots of people's places of work don't do the C2W scheme, so they can't participate even if they wanted to.
but people that do, get bikes cheaper - who pays? the taxpayer.
So your £300 saving was subsidised by other people that perhaps can't enjoy the same benefit as you.

So some folks aren't allowed to do it, but have to financially subsidise people who cheat and use it as an excuse to get a cheap bike for normal leisure activities that they would have bought any how. It's very wrong really.
Which is where we got to with our discussion that it should be a centrally run scheme for all, with the same deal available to all.
LOL, but like any government thing, it never really works out right, does it ;-)

Jeff

 

[2Loose]

Well this was actually one of the problems we were discussing.
People cheating the system and thinking it was ok.
Lots of people's places of work don't do the C2W scheme, so they can't participate even if they wanted to.
but people that do, get bikes cheaper - who pays? the taxpayer.
So your £300 saving was subsidised by other people that perhaps can't enjoy the same benefit as you.

So some folks aren't allowed to do it, but have to financially subsidise people who cheat and use it as an excuse to get a cheap bike for normal leisure activities that they would have bought any how. It's very wrong really.
Which is where we got to with our discussion that it should be a centrally run scheme for all, with the same deal available to all.
LOL, but like any government thing, it never really works out right, does it ;-)

Jeff

As I have said before, I am not convinced that subsidy is the right phrase as the purchaser effectively pays less tax, rather than having tax funds added to their purchasing power.
Ok, hmrc do lose out on a small bit of revenue which is where the gain to us comes from, but this is a drop in the ocean compared to completely legal tax avoidance by companies (which I would never class as 'subsidised' either.)

 

[jethro10]

As I have said before, I am not convinced that subsidy is the right phrase as the purchaser effectively pays less tax, rather than having tax funds added to their purchasing power.
Ok, hmrc do lose out on a small bit of revenue which is where the gain to us comes from, but this is a drop in the ocean compared to completely legal tax avoidance by companies (which I would never class as 'subsidised' either.)

well I'm happy to believe you!
and happy to add it to the conversation I was having with folk at work on the subject.
But I'm kind of lost on you "small bit of revenue", I would need it explained a bit more, sorry...

However you call it, if the person (A real example here, of a friend of a friend) gets a Cube Reaction and lights and odds and bods, £1600 worth, and he expects to pay less than £900, who pays the other £700? someone must.

As for tax avoidance by companies etc. sure it does happen, and look at what the banks seem to have done to use, but really, what has this got to do with my questions on the C2W scheme. You could easily say almost anything is more important/bigger/more worthy etc. etc. well except to the persons involved eh? so we could hit any "water cooler" chat on the head by saying "Who cares, you may get nuke'd tomorrow" ;-) it would get a bit boring quickly wouldn't it.

so my original question, semantics aside, still stands - in this one transaction many (hundreds of) pounds have not gone to the government I guess, meaning higher taxes for everyone else - especially unfair for those excluded by reason of where they work

don't get too hung up on it, it was only one part of our philosophical debate like:-
does the NHS bill shrink more than the subsidies cost - fitter people
Does the bike sales help the economy more than the subsidies cost.
Does the savings in car emissions offset the environmental cost of manufacturing all the bikes and kit bought, of which many sit unused.
Should we stop the C2W scheme and use the cash to fund free rental bikes for the unemployed.
etc.

It all got quiet convoluted ;-)

Jeff

 

[summerdays]

But is the CTW scheme any different from many other schemes - there are usually winners and losers ... fathers now a days get far more paternity leave than the 2 days Mr Summerdays got, friend had some kind of subsidized computer deal through the government, and then there were the child care vouchers or even how the government is implementing their Child Benefit scheme. As my salary fluctuates I couldn't use it myself to buy a bike but I don't begrudge those who have bought a bike - I still win from the increase in bikes and potentially it could increase the size and niceness of the second-hand market if they decide cycling isn't for them and they may as well get rid of that bike out of the corner of the shed/garage (if its in the garden they can keep it).

I don't know what method the government will use to calculate if the scheme has been a success overall but it has succeeded in changing the commuting habits of some people.

To the OP what % uptake or other method would you have used to monitor the scheme and decide on its effectiveness?

 

[2Loose]

so my original question, semantics aside, still stands - in this one transaction many (hundreds of) pounds have not gone to the government I guess, meaning higher taxes for everyone else - especially unfair for those excluded by reason of where they work

Person does not buy bike. Hundreds of pounds have not gone to the government.

Taxes raised for everyone else?

Sounds like a fun conversation though

 

[Norm]

Person does not buy bike. Hundreds of pounds have not gone to the government.

Taxes raised for everyone else?

Sounds like a fun conversation though

Income tax fraud is usually low level. You seem to be suggesting that it's ok as long as there isn't much money involved.

Let's be clear here. Using the C2W regulations to get a tax-free salary sacrifice to buy a bike with no intention of following the requirements of those regulations is tax evasion.

 

[Bman]

My ex-colleague.

He drove 2 miles to work everyday. He only decided to look into the C2W scheme for a good bike to help him save money and loose the belly.

He went for it, bought a decent £350-400 bike and all the accessories that he never would have shelled out for without C2W. In fact, his confidence in the financial part of the deal drew me into it.

Now he is fitter, healthier and is not taking up room on the roads every morning.

So is that +2 for C2W?

 

[2Loose]

Income tax fraud is usually low level. You seem to be suggesting that it's ok as long as there isn't much money involved.

Let's be clear here. Using the C2W regulations to get a tax-free salary sacrifice to buy a bike with no intention of following the requirements of those regulations is tax evasion.

That wasn't my intention at all.

I was trying to illustrate how a tax free bike sale via C2W is not taking anything from the economy through a lack of taxation, compared to a lack of a sale imo. Certainly not 'subsidised' by the taxpayer as suggested. Although I do agree that there is less tax than normal raised from such a purchase.

In fact, I believe that the C2W price + the tax on the final payment should still contribute in a positive way (along with reduced healthcare costs, etc) to the economy as a whole.

However, I am not a financial expert so bow to superior knowledge if you think otherwise.

 

[col1888]

jethro10

Not sure if you misunderstood my post, but let me tell you i'm not cheating the system ! I was using my Giant Defy, bought full price by myself to commute anyway. I use the CUBE MTB to commute also ! As i will the CUBE Attempt ! I agree it should be available to all, but is that my fault ? No ! Yes my £300 may be subsidised by those who can't participate but then a lot of those may be fat with health problems that i subsidise their treatment and medication. Just as my taxes are used to subsidise the methodone and other treatments given to the great unwashed junkies in society. It is naive to think that if a scheme such as this exists that it will not be taken advantage of by some, again who is at fault ? Surely the administrators. I do believe that some who initially buy them for leisure end up commuting as their fitness and love for cycling grows. As to how you measure its effectivness , God knows !

Col

 

[Yorkie Martin]

Interesting discussions - especially for a bean counter (accountant).

Tax legislation will always have "winners" and "loosers" - most legislation does (doesn't it?), but why not enjoy this while we can?

As I see it (and I am currently paying for one of my bikes under C2W), C2W has encouraged me and some of my colleagues to cycle to work. Yes, some of us did commute by bike prior to C2W, but some did not. Most of us are also car owners, and we are still paying Road Fund License for the days we have cycled to the office without wearing out the roads!!

We now pay VAT on the servicing and repairs of our bikes, create/maintain the employment of the cycle shop staff (who pay PAYE/NIC), pay insurance on the cycle (thus creating employment & taxable profits) and not forgetting that the cycle shop will be taxed on the profit they make from the sale of the bike. Having bought a Genesis (British bike), the manufacturer will also be paying tax on the profit, and PAYE/NIC on their staff costs.

HMR&C do loose the VAT - as my employer can claim this back, which otherwise I could not, and the PAYE/NI on my salary for this cost.

Therefore, I like to look at the bigger picture - it is not as simple as suggesting that a £1000 bike means £300 less tax for HMR&C for example.

I have certainly seen more people help the environment through C2W than I have buy an electric car (where does the power come from??) because of the tax breaks on these vehicles, and whether driving a petrol, diesel or electric car - you don't get the health benefits of cycling and arrive at work smiling rather than being pent up/stressed after sitting in traffic while the cycles glide by!!

 

[jethro10]

jethro10

Not sure if you misunderstood my post, but let me tell you i'm not cheating the system ! I was using my Giant Defy, bought full price by myself to commute anyway. I use the CUBE MTB to commute also ! As i will the CUBE Attempt ! I agree it should be available to all, but is that my fault ? No ! Yes my £300 may be subsidised by those who can't participate but then a lot of those may be fat with health problems that i subsidise their treatment and medication. Just as my taxes are used to subsidise the methodone and other treatments given to the great unwashed junkies in society. It is naive to think that if a scheme such as this exists that it will not be taken advantage of by some, again who is at fault ? Surely the administrators. I do believe that some who initially buy them for leisure end up commuting as their fitness and love for cycling grows. As to how you measure its effectivness , God knows !

Col

Sorry if I misunderstood you. BTW, the bit in bold came up in or chat also - along with unhealthy people pay a sliding scale charge above the free basic NHS service
the conclusion I came to finally is it's impossible to tell almost anything!
Civilisation is a complex thing if you think about it too deep!

Jeff

 

[taxing]

I didn't have a bike, I got one through C2W, and now I cycle to work every day.

However, because I didn't qualify for the C2W scheme myself (I was doing agency work when I got my bike) I did it through my mum. She qualified, so she got the bike and gave it to me. Now technically that's wrong, as she never had any intention of riding the bike to work herself (in fact she walks). But in reality one more person does cycle to work, so who cares whether it's my mum or me? In fact this highlights my main problem with the scheme: if you're on minimum wage, you can't take part. If you're on a temporary contract/doing agency work, or on benefits, no subsidised bike for you. These are the people who need more help with buying a bike, and they're the ones who can't take part.

If neither of us had qualified I wouldn't have been able to afford a £250 bike, I was looking at one for £120. It would have been lower quality, and probably wouldn't have lasted me this long, or if it had it wouldn't be as enjoyable to ride so it would have ended up chucked in the shed long ago.

 

[ComedyPilot]

Could someone explain the CTW scheme to a thicky (me), using simple lanuage, phrases and monetary speak.

My company is toying with the CTW scheme, and has announced it is looking for interested people.

I would love to do it, so what does it mean?

I pay 'some' money out of my salary before tax to the 'scheme'.

After 1 year the scheme ends, I walk away and give the bike back, or pay a lump sum to buy outright, or pay a nominal sum and carry on hiring for another 4 years?

If for example I got a bike for £700, what sort of outlay am I looking at?

Can I get another in a year if the scheme is run again? (and then continue with the 4 year payment on the first bike?)

 

[Broadside]

ComedyPilot: I got a voucher for £700 in 2009. It cost me £35/month out of my pay packet for 12 months, then I paid £50 to extend the hire period for another 37 months, which takes the overall rental period to just over 4 years. I am not expecting to pay anything else now and in 2.5 years the bike will become mine.

The £50 to extend the hire period is called a deposit, so at the end of the hire period C2W retain the deposit as payment for the market value of the bike.

When the initial loan period comes to an end (normally) after 12 months you should be eligible to enroll on the scheme again and get another bike. However MMRC changed the goal posts part way through my initial rental period so I wouldn't be surprised to see them move the goal posts again in the future.

 

[ComedyPilot]

ComedyPilot: I got a voucher for £700 in 2009. It cost me £35/month out of my pay packet for 12 months, then I paid £50 to extend the hire period for another 37 months, which takes the overall rental period to just over 4 years. I am not expecting to pay anything else now and in 2.5 years the bike will become mine.

The £50 to extend the hire period is called a deposit, so at the end of the hire period C2W retain the deposit as payment for the market value of the bike.

When the initial loan period comes to an end (normally) after 12 months you should be eligible to enroll on the scheme again and get another bike. However MMRC changed the goal posts part way through my initial rental period so I wouldn't be surprised to see them move the goal posts again in the future.

Who is the 'extended hire' with? HMRC?

Is the ongoing cost still £35 per month?

If so, doesn't that make it about £1350 - £1400 hire costs for a £700.00 bike?