Cyclescheme and online

[voodoochilli]

I'm sure this has been asked before but couldn't see anything.

I'm in the lucky position of being a director of my own small, limited company. As I understand it, this means I could buy a bike for the company (ha, me!) and lease it to myself and it would be tax free which is always a bonus when VAT is at a whopping 20%.

Questions:

1 - I know Decathlon participate, but am I able to purchase a bike online, rather than at a store?
2 - My company is not VAT registered, do we still get the VAT reduced? How much would we really save?
3 - If the purchase is a business one, then surely it becomes a company asset meaning that the entire amount is deducted as a business expense, correct? Surely this would be the case without the scheme?

 

[themosquitoking]

My mate just did something similar but i couldn't as i'm not a limited company,the best person to ask is your accountant though i reckon.

 

[Cycleops]

You need to check the cycle to work scheme. Might be for companies with a minimum number of employees and you might also have to be VAT registered.

 

[Cycleops]

Have just checked and they do ask for your VAT regsituation number so looks like you may be out of luck.

 

[voodoochilli]

My mate just did something similar but i couldn't as i'm not a limited company,the best person to ask is your accountant though i reckon.

Fired that guy years ago, ripped me off big time...Have to do it all myself now, but it isn't easy.

 

[voodoochilli]

You need to check the cycle to work scheme. Might be for companies with a minimum number of employees and you might also have to be VAT registered.

No, the scheme can be joined without VAT registration, my question is whether or not online purchases are valid or you have to choose a local bike store.

 

[fossyant]

You can save the NI and Tax but not the VAT as you are not VAT registered. On-line might be valid, but you'd need to post off the voucher. Speak to a few shops/on-line stores

 

[400bhp]

If you're a director then you're not PAYE, so not sure you can legitimately use the cycle to work scheme?

You could set up a PAYE for yourself I guess, or claim the bicycle as a legitimate business expense.

Little point asking on here-you need to speak to an accountant.

 

[voodoochilli]

Thanks both.

I do use PAYE, because I'm a employee of my own company, I'm not self employed. It's a little complicated.

I've applied for the scheme, but may just go ahead and purchase a bike soon and see if I can count it as a business asset in next years tax return. wont make a huge difference to the tax bill to be honest.

Thanks again

Harry

 

[Herr-B]

You can use t'interweb, I got mine from Ribble but I don't know if others do it without you popping by with ID.

 

[Flying Dodo]

You don't have to use any of the official schemes at all. It's absolutely fine to buy the bike online (obviously in the firm's name), and then put the expense through the books.

As mentioned above, if the firm isn't VAT registered then you can't claim the VAT back.

Normally though if you, or any other employee then uses the firm's assets ie the bike, then it would be a P11D taxable benefit. The Cycle to Work scheme merely confirms that provided at least 50% of the bike's journeys are for commuting to work, then it's not a taxable perk.

Generally employees are expected to repay the cost of the bike purchase, but as this is done by reducing their salary, payment is net of tax and employees NI, so means savings of up to 32% compared with the employee buying the bike themselves out of taxed income.

However, there's no requirement for the employer to make the employee repay the net amount, so if you run your own company, I wouldn't bother!

Full HMRC guidance is shown here.

 

[voodoochilli]

This is what I'm doing, thanks!

 

[lejogger]

HMRC changed the rules on salary sacrifice last year to state that VAT is payable on all C2W salary sacrifice repayments.

This had little impact on the public sector because we couldn't reclaim the VAT in the first place so all payments covered the full cost of the bike and equipment.

Now we can reclaim the VAT but the repayments have stayed the same - we just have to pay the difference to HMRC rather than pass the savings onto the employees or keep as a surplus.

 

[Supersuperleeds]

Pretty much what Flying Dodo said, just one more point. Do you have any other employees? If so the scheme has to be open to all, though you can limit the number of participants each year.

You could get the company logo on the bike and write it off as a marketing expense and forget the cycling scheme paperwork!

 

[voodoochilli]

Yeah 2 employees! My wife and myself! I think I'll limit it to 1! (Joke!)

Going to just claim it as a business expense. I rarely claim anything so I doubt the tax man will have a problem.