Cycle to work scheme

peacock suit said:

Rumour has it in my workplace that there is a scheme that will allow
employers to provide bikes for employees at half price with deductions
coming from your wages.

Is this true and how do we apply

There is such a scheme (known as IR176). Your employer may be
implementing it, and teh precise details you should find out from your
employer.

Broadly speaking it works like this:

Your employer buys a bike and accessories for commuting.
You pay the employer a mutually agreed amount per month out of gross
salary for the use of the bike.
After a period of time you can purchase the bike from teh employer at a
peppercorn rate, effectively nothing.

The savings come from paying no tax or NI on the portion of your wages
that go to the employer. The employer can also deduct VAT in some
cases. The employer also does not have to pay NI on the amount
deducted.

Exactly how this is implemented will be up to your employer so ask
them.

...d

peacock suit said:

Rumour has it in my workplace that there is a scheme that will allow
employers to provide bikes for employees at half price with deductions
coming from your wages.

Is this true and how do we apply

As far as I'm aware, there are companies which will administer the scheme
on behalf of your employers.
http://www.booost.uk.com/

"peacock suit" <[email hidden]> wrote in message
news:[email hidden]...

Quoted message said:

Rumour has it in my workplace that there is a scheme that will allow
employers to provide bikes for employees at half price with deductions
coming from your wages.

Is this true and how do we apply

http://www.booost.uk.com/employees/next/

--
Simon Mason
http://www.simonmason.karoo.net

There was an advert in AtoB this month from an organization/company who
can help companies set this scheme up for employers. I cant remember
the name of the company.

stupot said:

There was an advert in AtoB this month from an organization/company who
can help companies set this scheme up for employers. I cant remember
the name of the company.

http://www.cyclescheme.co.uk

--
Tony

"I did make a mistake once - I thought I'd made a mistake but I hadn't"
Anon

David Martin said:

After a period of time you can purchase the bike from teh employer at a
peppercorn rate, effectively nothing.

Not quite. You must pay either a fair market value or tax/NI on the
difference between fair market value and what you paid. Its one of the
hidden catches that make it not quite as good as it seems. For a
Brompton that holds its value, its a lousy deal. For some bikes that
depreciate heavily so they are worth much less than half their original
value, it could be worthwhile.

Cyclescheme note "A fair market value payment may be required to end the
lease if you want to make the bike yours"

The bike is supposed to be used mainly for journeys to and from work as
well.

--
Tony

"I did make a mistake once - I thought I'd made a mistake but I hadn't"
Anon

Tony Raven said:

David Martin said:

After a period of time you can purchase the bike from teh employer at a
peppercorn rate, effectively nothing.

Not quite. You must pay either a fair market value or tax/NI on the
difference between fair market value and what you paid. Its one of the
hidden catches that make it not quite as good as it seems. For a
Brompton that holds its value, its a lousy deal. For some bikes that
depreciate heavily so they are worth much less than half their original
value, it could be worthwhile.

Not strictly true. 'fair market value' in this context was clarified in
the budget to being in accordance with typical depreciation rates (ie
three years to zero value) and would not be challenged unless blatent
abuse was being made. So three years for a brompton would be fine.
three months however would be pushing it. Three days would be taking
the proverbial.

Quoted message said:

Cyclescheme note "A fair market value payment may be required to end the
lease if you want to make the bike yours"

Indeed. It is the definition of 'fair market value' which has been
clarified.

Quoted message said:

The bike is supposed to be used mainly for journeys to and from work as
well.

or be your main method of getting to work.

...d

David Martin said:

Indeed. It is the definition of 'fair market value' which has been
clarified.

Its well understood in tax and benefits circles. Its what someone would
likely pay for it if it were offered on an open market. So for a
Brompton three years old it would be tough to argue is was worth much
less than £300 because that and more is what they regularly sell for
second hand. Its certainly not the peppercorn £1 that has been suggested.

--
Tony

"I did make a mistake once - I thought I'd made a mistake but I hadn't"
Anon

Tony Raven said:

David Martin said:

Indeed. It is the definition of 'fair market value' which has been
clarified.

Its well understood in tax and benefits circles. Its what someone would
likely pay for it if it were offered on an open market. So for a
Brompton three years old it would be tough to argue is was worth much
less than £300 because that and more is what they regularly sell for
second hand. Its certainly not the peppercorn £1 that has been suggested.

This can however be worked around. There are two provisions. Firstly
you must have no right to buy the equipment, otherwise it is a
Hire-purchase agreement rather than a hire and is then not eligible.
Secondly, the loan can be indefinite, so after paying a certain amount
to the employer through a salary sacrifice you can retain the equipment
on permanent, free loan until such time as the employer decides
otherwise.

So you can in effect buy a bike, but it isn't yours. As soon as the
bike is sold, then VAT is incurred, however any compensation due the
employer for non-completion of a hire agreement is not liable for VAT.

It would be a good scheme if you are intending to stay with one
employer long enough for the bike to drop sufficiently in value.
Unfortunately the issues regarding maintenance and spares could be more
interesting.

How much is a second hand brompton worth with no brake cables, worn out
brake blocks and perished tyres with punctures in? One could perhaps
reasonably recover the cost of the parts provided under maintenance
from the final purchase price.

The other thing to note is that there is a de-facto upper limit of
1000GBP (but no limit on the number of bicycles) unless the employer
has their own consumer credit act license.

Tis not quite as clear cut as one might like, and problematic if you
are in a field where jobs are regularly changed.

...d

David Martin said:

The other thing to note is that there is a de-facto upper limit of
1000GBP (but no limit on the number of bicycles) unless the employer
has their own consumer credit act license.

Tis not quite as clear cut as one might like, and problematic if you
are in a field where jobs are regularly changed.

I am sure you can find creative solutions and I am sure a number of
small willing employers will simply hope its not picked up. But it is
an issue and one that the scheme promoters skip over rather quickly. So
you need to be aware that it is not necessarily the good deal you
think it is unless someone is prepared to bend the rules a little. A
bit like smuggling a bike back through Customs, you will likely get away
with it if everyone turns a blind eye but you cannot rely on it.

--
Tony

"I did make a mistake once - I thought I'd made a mistake but I hadn't"
Anon

in message <[email hidden]>, John Hearns

(') said:

peacock suit said:

Rumour has it in my workplace that there is a scheme that will allow
employers to provide bikes for employees at half price with deductions
coming from your wages.

Is this true and how do we apply

As far as I'm aware, there are companies which will administer the
scheme on behalf of your employers.
http://www.booost.uk.com/

There are, but you are not obliged to use them and they are not good
value for money.

--
[email hidden] (Simon Brooke) http://www.jasmine.org.uk/~simon/

;; Want to know what SCO stands for?
;; http://ars.userfriendly.org/cartoons/?id=20030605

"David Martin" <[email hidden]> wrote in message
news:[email hidden]...

Tony Raven said:

David Martin said:

Indeed. It is the definition of 'fair market value' which has been
clarified.

Its well understood in tax and benefits circles. Its what someone would
likely pay for it if it were offered on an open market. So for a
Brompton three years old it would be tough to argue is was worth much
less than £300 because that and more is what they regularly sell for
second hand. Its certainly not the peppercorn £1 that has been suggested.

This can however be worked around. There are two provisions. Firstly
you must have no right to buy the equipment, otherwise it is a
Hire-purchase agreement rather than a hire and is then not eligible.
Secondly, the loan can be indefinite, so after paying a certain amount
to the employer through a salary sacrifice you can retain the equipment
on permanent, free loan until such time as the employer decides
otherwise.

So you can in effect buy a bike, but it isn't yours. As soon as the
bike is sold, then VAT is incurred, however any compensation due the
employer for non-completion of a hire agreement is not liable for VAT.

It would be a good scheme if you are intending to stay with one
employer long enough for the bike to drop sufficiently in value.
Unfortunately the issues regarding maintenance and spares could be more
interesting.

How much is a second hand brompton worth with no brake cables, worn out
brake blocks and perished tyres with punctures in? One could perhaps
reasonably recover the cost of the parts provided under maintenance
from the final purchase price.

The other thing to note is that there is a de-facto upper limit of
1000GBP (but no limit on the number of bicycles) unless the employer
has their own consumer credit act license.

Tis not quite as clear cut as one might like, and problematic if you
are in a field where jobs are regularly changed.

My employer is doing something similar with computers. Only fly in the
ointment we can see is, someone coming up for retirement, having made a
salary sacrifice, has his pension calculated on final salary.

****Don't do it if it means the scheme will still be active in your final
year in employment**** (unless you aim to peg out very soon after
retirement).

---
IanH

ian henden said:

My employer is doing something similar with computers. Only fly in the
ointment we can see is, someone coming up for retirement, having made a
salary sacrifice, has his pension calculated on final salary.

****Don't do it if it means the scheme will still be active in your final
year in employment**** (unless you aim to peg out very soon after
retirement).

Check the terms of your pension scheme. Mine specifically allows the
highest annual salary (inflation corrected) in the n years before
retirement (could be up to 5, can't remember without checking the
bumpf) to be taken, as long as sufficient contributions have been made
beforehand. This allows for gradual downgearing towards returement with
no loss of pension.

...d

"David Martin" <[email hidden]> wrote in message
news:[email hidden]...

Quoted message said:

ian henden said:

My employer is doing something similar with computers. Only fly in the
ointment we can see is, someone coming up for retirement, having made a
salary sacrifice, has his pension calculated on final salary.

****Don't do it if it means the scheme will still be active in your final
year in employment**** (unless you aim to peg out very soon after
retirement).

Check the terms of your pension scheme. Mine specifically allows the
highest annual salary (inflation corrected) in the n years before
retirement (could be up to 5, can't remember without checking the
bumpf) to be taken, as long as sufficient contributions have been made
beforehand. This allows for gradual downgearing towards returement with
no loss of pension.

You are probbly dead right, and, since there are many different pension
schemes out there, anyone taking on this "salary sacrifice" scheme near
retirement age needs to do just that - check pension implications.

OTOH, the "reduction" - sacrificed amount - might be quite useful where one
needs to minimise their income - where CSA are involved, for example, or to
fall within some benefits thresholds .....

--
IanH