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Woop! Going to get me some posher bikes once this year's jump bike is finished
Employers loan bicycles to their staff as a tax-free benefit on the condition that the bicycles are mainly used to get to and from work or for work-related purposes.
Total scam, e-bikes aside who's going to use their £3000 bike as described above (tiny minority). If I wanted a commuter it wouldn't cost anything like a £1000 let alone more.
@taxi25 I spent £1200 on my bike to work bike which is very much mostly used for commuting to work on. It was actually a £1700 Cannondale caad12 in a sale and I also swapped out the standard wheels for some Hunt ones with the lbs I got it from. My employer already had a £2k C2W limit though, not £1000.
Some people want something cheap they can leave in a relatively insecure place once they get to work but I’ve got a reasonably secure (famous last words) place to lock mine at work. So I’d rather have something decent to cycle on.
Every company I’ve worked for has been too lazy!
Good share by the way.
people that don’t have space for n+1 bikes can now use the scheme to buy a decent bike that they use for work in the week and then be rad on at the weekend. That’s a good thing. I would image there are loads of people that don’t use the scheme that cycle to work because of the old 1k limit.
Great. More tax breaks for the rich (higher rate tax payers save the most). But if you are on minimum wage you can't access it at all.
Should be scrapped.
Does ‘work related purposes’ include keeping fit for your, ahem, physically demanding job?
The story says it was announced today but not when the limit is removed or have i missed it all together?
Interesting. Makes total sense for ebikes
Oh damnit. I'm in the process of handing over money for an ebike well over the old 1k limit. I think it'll complete before c2w rules get updated and my company catches up.
I agree @boriselbrus. Any suggestions for a scheme that would benefit those on low wages? Maybe a voucher to spend in a lbs?
Yep. The fact that high rate tax payers save loads more is truly unbel......
Edited. I was going to say unbelievable, but actually it fits in perfectly with the rest of the way this ****ed up country works.
Yes it's wrong that basic rate taxees save less.
High rate tax payers may well save loads, bit they (we) also pay a shit load of tax & NI contributions also, fairs fair at the end of the day.
Don't higher tax rate payers save more due to being over the 40% rate, so being at the point of benefiting more from any tax reductions through schemes like this?
Don’t higher tax rate payers save more due to being over the 40% rate, so being at the point of benefiting more from any tax reductions through schemes like this?
They save a bit, but not an enormous amount as a 25% BIK payment is due at the end of the "hire" period. On the other hand, it's salary sacrifice (I think?) so if you used it to get you below the point where your tax-free allowance is wiped you'd effectively get the bike for free.
No you wouldn't as you'd drop below the 40% threshold and subsequently pay tax at the base rate.
You actually save 62% if you're earning between £100k and £120k - that's the effective tax rate there.
Minimum wage earners (full time) are on 17k, so still able to save ~30% tax+national insurance.
5lab, I think minimum wage workers aren't allowed to use salary sacrifice schemes as it takes them under minimum wage (voluntarily but still), and that's the problem. It's unfortunate as a bike is far cheaper than public transport so would be of real benefit.
Ah yes, thanks for clarifying (my bad)
Yes, those who would benefit most are unable to use it including ironically many who work in bike shops. The rich however get a discount of nearly 50%.
So it should be scrapped for us all because you don’t like someone else getting more benefit than you, boriselbrus?
will the term be extended from 12 months?
The rich however get a discount of nearly 50%
They'd get a £1000 bike for £380 'cash', then pay £155 as bik tax (assuming their company doesn't charge then the £250) - so the max rate is 47%. 40% tax payers would pay £610 cash then £102.50 bik - a total discount of 28%. Not sure I'd call those people rich though..
Seeing as we're allowed to make assumptions about how much money people have and what they can afford and what they're entitled to, I guess someone on minimum wage shouldn't really be spunking in excess of a grand on a push bike.
I don't begrudge folk on six-figure salaries getting £1000/month car allowances - my old boss got that and he caught the train to work ¯\_(ツ)_/¯ - so why do others begrudge someone maybe edging into the 40% tax bracket saving a couple of hundred quid on a bike? Especially when they'll already be paying considerably more income tax and NI than someone on a lower salary?
They’d get a £1000 bike for £380 ‘cash’, then pay £155 as bik tax (assuming their company doesn’t charge then the £250) – so the max rate is 47%. 40% tax payers would pay £610 cash then £102.50 bik – a total discount of 28%. Not sure I’d call those people rich though..
Not one of the C2W providers charges for BIK - they all have similar ‘end of scheme’ arrangements where the employee pays nothing at the end.
Total scam, e-bikes aside who’s going to use their £3000 bike as described above (tiny minority). If I wanted a commuter it wouldn’t cost anything like a £1000 let alone more.
And to go back to an early post..
If you are starting from scratch and intending to actually commute on your bike, you might need some kit:
Helmet
Lock
Lights
Tools
Pump
Waterproof
Bag/panniers
Mudguards
Etc
At a conservative estimate that could cost over £300. (very conservative considering the price on decent waterproofs and locks!) Leaves you with less than £700 for a bike to be used daily in all weathers.
You might be happy riding a cheap, piece of crap bike. I’m not. Just like all those people driving to work in BMWs, Mercs, etc. Why aren’t they all in Dacias like me!
At the end a bike is considered to be worth 25% of the value. The advice for companies is either charge you the 25% (after tax), gift it to the employee (and charge them bik on the amount as a line item on their payslip), or rent the bike to them for another 2 years (I think at a cost). If your company isn't doing one of those things I'd suggest they're on dodgy ground
It's close to zero that my boss will set up a C2W unless he decides he wants a new bike. How does the third party set up work? Would be nice to have something new rather than second hand.
or rent the bike to them for another 2 years (I think at a cost).
This bit is incorrect, 5lab.
If your company isn’t doing one of those things I’d suggest they’re on dodgy ground
Just to give you an idea, HMRC and DfT both transfer ownership to the C2W provider (the external company) who own it for around five years. The employee pays nothing but doesn’t own the bike until there is zero residual value. You’d better tell the people who write the guidelines that they are being dodgy. 😂
At the end a bike is considered to be worth 25% of the value
Depends on the original cost of the bike. Under 500 then its less. Logically though that suggests they may well put in a higher bracket alongside the lifting of the 1k limit though.
because you don’t like someone else getting more benefit than you, boriselbrus?
Personally I would like to see some evidence that it actually provides decent value for money in its stated objective of encouraging alternative means of getting to work.
Some enforcement of it could be entertaining as well.
Sorry, looks like you can rent it for no cost for 3 years, but after that pay 3 or 7% of the value (rather than monthly fee?) - a bit of a dodge either way
https://www.cyclescheme.co.uk/employers/employer-updates/hmrc-update
Sorry, looks like you can rent it for no cost for 3 years, but after that pay 3 or 7% of the value (rather than monthly fee?) – a bit of a dodge either way
Halfords and Cycle Solutions do it for five years at no cost. Not sure about Evans.
Personally I would like to see some evidence that it actually provides decent value for money in its stated objective of encouraging alternative means of getting to work.
Id prefer that they looked at company car use and company fuel use.
High rate tax payers may well save loads, bit they (we) also pay a shit load of tax & NI contributions also, fairs fair at the end of the day.
Well no, because the higher tax rate only applies to earnings over the threshold. And additional NI is at 2%. I also get higher rate tax relief on my additional pension contributions. All in all, it's pretty cushy...
So it should be scrapped for us all because you don’t like someone else getting more benefit than you, boriselbrus?
No, it doesn't affect me personally. I'm unlikely to buy another new bike and if I do I can get it at trade and can afford to pay for it in full.
My issue is that it's just one of many ways that the poorest in society end up paying more for some things than rich people. The same rules apply for Childcare vouchers - not available if you're on minimum wage. The poor pay more for car tax as they have to buy it in 6 monthly intervals which costs more than 12 monthly intervals, they have to pay in advance on pre payment meters for utilities. They can't afford monthly or annual tickets for public transport so pay more for daily tickets to get to and from work.
Austerity has hit the lower waged disproportionately and austerity has happened because tax receipts are lower than government spending. When poor people see essential services being cut due to austerity and then they see rich people getting a tax break on a very expensive toy they rightly question the validity of the scheme. Especially when so many of the bikes never get ridden to work anyway.
One of our lads rides 15 miles each way to work on a 5 year old Carrera Subway which was about £300 new. No-one needs a 2 grand bike to commute. The scheme should be capped at £500 and not available to higher rate tax payers.
Notes - I know I have used the words "rich" and "poor" in a very generalised way. I used to be a higher rate tax payer and had the same view even then. I'm now basically semi retired (as far as money is concerned, I still work full time) and I work for a bike recycling and advocacy charity. If the C2W scheme was scrapped we may sell more bikes as we are a cheap alternative. We would also get fewer high quality donations as some give the bike to us at the end of the loan period in order to get another bike on the scheme. It's probably about even for us.
, I guess someone on minimum wage shouldn’t really be spunking in excess of a grand on a push bike.
You've no idea do you?
An example.
Edinburgh busses are 50quid a month.
Over 3 years thats in excess of £1500.
They don't have to spunk a grand on a pushy but even if they did at the end of three years it would still be a saving and the bike is unlikely to have dissolved!
But they can't even benefit from getting the tax off a £300 quid bike and the gear they require that they pay off in installments straight out their pay pack.
So it should be scrapped for us all because you don’t like someone else getting more benefit than you?
It shouldn't be scrapped - anything that might encourage more cycling is a good thing. However there should also be schemes for poorer people, not based on tax, so that they can also benefit from a cheaper bike purchase.
Early this year I was working part-time as I was caring for a relative. I bought a new bike to commute, but could not benefit from any of the schemes as I wasn't taxed. I had to buy the bike anyway as I really needed it to get to work, but I relied on a generous neighbour giving me a lift for the first month so I could save enough to buy it. that would have been a good point for the state to step in with a little help.
Generally, I agree with boriselbrus. A flat-rate saving for all levels of employees makes sense. Same goes for childcare vouchers and pensions.
As we all know though, the real issue goes way beyond allowances and schemes. I’m a firm believer in Universal Basic Income that pays for the necessities in life. As a nation and in fact the western world, we can afford to ensure all have a basic standard of housing, none go hungry and people are clothed.
Bunch of hippies on this thread.
Next thing you know you'll all be riding bikes to work instead of firing up the bimmer
Childcare Vouchers are (/were) the opposite - capped at £124 for higher rate tax payers and £248 (IIRC) for basic rate.
No you wouldn’t as you’d drop below the 40% threshold and subsequently pay tax at the base rate.
He said at the point you lose your tax free allowance, which is £150k. If buying a bike takes you down below £150k taxable you get your tax free allowance back (a part thereof) which further offsets the savings. Above £100k the effective savings are better because of the extra tax free allowance you get, or don’t lose anyway.
He said at the point you lose your tax free allowance, which is £150k.
The allowance is removed between 100 and 123k, the effective rate of tax is thus 62%. At 123k it goes back down to 40% (Inc national insurance) then 150k takes you back up to 45%. Not exactly clear 🙂
You're right otherwise though
Could be great timing and I intend to max this out. I moved into higher tax bracket aeons ago through hard work and have moved onwards and upwards from there.
Tax benefit? Yes please.
I pay full UK tax, make regular and sizeable charitable donations, provide time and professional expertise to the homeless sector.
I give, the state takes.
The state gives, I take - when it suits.
The state will never please all of the people all of the time.
About time they clarified, I wasn’t allowed to top up my Halfords voucher in April so I didn’t actually replace my old bike.
They also need to clarify accessories only. I looked into replacing the drive on old bike with a new group set. This also wasn’t allowed, but tredz would let you buy a Zipp 404 on c2w. Totslmess.
As for tax break agree it’s a little bit unfair, but really, there is much much more unfairness out there. If this bothers you you must be very unhappy
That’s going to be some massive salary deductions over the course of a year or are they extending the term too?
I like it how people are saying this tax dodge is ok as it’s more accessible to lower wage earners
Already had a google but couldn't find anything, anyone know how this would impact the halfords cycle to work scheme?
A lot of stick on here for the higher rate tax payer thing. As far as I can work out you get relief from the tax rate you get - so if you pay a higher rate of tax then you’re automatically getting a bit more benefit.
But if you are on minimum wage you can’t access it at all.
Minimum wage earners (full time) are on 17k, so still able to save ~30% tax+national insurance.
what about f you are in the 'gig' economy or self-employed?
My partner works in care. Many of the staff are 'agency' and some also do not drive and take taxis a lot, either from home or from the local train station.
Something like the brompton ebike would be perfect for them but I don't think they can access it as they are self-employed ?
hat about f you are in the ‘gig’ economy or self-employed?
most of the people i know who are self employed are already fleecing the tax system, so missing out on a few pounds won't worry them.
Is it possible to buy just a frame on C2W?
Legally? god knows. I've done it twice though through my lbs.
No doubt there will be a 'cyclist' along in a minute to say no, it's immoral and illegal and you deserve to die, what if it was a childs face, a baby robin blah blah blah....
Something like the brompton ebike would be perfect for them but I don’t think they can access it as they are self-employed ?
As a money grabbing ltd co wielding IT contractor I just buy the bike through the company and use it for attending meetings/visiting client sites etc, then write it off after an appropriate amount of time. Not sure if sole traders could do it though.
This isn't going to decrease the price of bikes, is it?
Still could take a while for it to filter through: a previous employer of mine had their own cap of £500 until 2 years ago. The HR Director was one of those Audi owners with a "you could buy a car for that" attitude!
so the tax saving will still be tax rate x £1,000 it just means if i want to buy a £1,200 bike
the stupid rules about £1,000 max spend doesnt matter..
which as a friend once told me most local bike shops got around anyway by issuing a receipt for £1,000 and taking the cash/ payment difference seperately..
most of the people i know who are self employed are already fleecing the tax system, so missing out on a few pounds won’t worry them.
Self-employed also includes contractors, right? Contractors can not only get the benefit of the higher tax rate savings, but did you know they can also claim BIKE MILEAGE! just for using the bike to get to work...
The C2W scheme is no more biased to those on a higher tax rate than any other salary sacrifice schemes.
I've seen these to include: Additional Pension Contributions, Childcare, Home Computers and buying or leasing Cars.
Whilst it is true that those who earn more can make more bang for their buck, the moral issue is surely more around supporting a political party with a tax scheme you approve of?
You could spend over £1000 anyway if you used Green Commute Initiative.
You could spend over £1000 anyway if you used Green Commute Initiative.
As far as I can tell the "change" is just the guidance clarifying its legal to use them or other FCA approved 3rd parties.
The £1000 limit was because your company would need to be FCA authorised to offer more, green commute initiative are able to run it on the behalf of other companies, they own the bike rather than your company.
Free bike vouchers for the workers, down with the rich who benefit most from C2W schemes! Maybe when Komrade Korbynistyn sizes power he'll nationalise the bike industry, Grifters and Choppers all round, priceless
So sorry if I'm being hard of thinking but does this mean that the amount above £1000 is part of the salary sacrifice loan (so realising a bigger tax benefit) or just that the top-up ability which some shops allowed you to do is now ok? It's not clear form the article or when it comes into force.
Nothing is coming in to force, it's guidance for companies using cycle to work schemes.
Your company buys the bike and hires it back to you using salary sacrifice. This has a £1000 limit unless the company has been authorised by the FCA.
Alternatively a 3rd party purchases the bike, in which case it can be over £1000 if they are FCA authorised. Green Commute Initiative are already doing this, others may follow now the government has clarified the legality.
How much Tax and NI (and employer NI contributions) is not paid through all the bike to work salary sacrifices? I'd be keen to see that money used to remove VAT from bike purchases instead. Probably wouldn't stretch as far as all bike sold but you could catagorise bikes as 'commuter friendly' and they get the exemption. So no more weekend gnar sleds for BMW driving high rate tax payers that never go anywhere near a place of work. Surely more fair than the current situation.
Is there any hint as to when this will come into force? The goverment's own press release doesn't say so, but if it's come into force immediately then they haven't updated the guidance on their website.
And am I correct in understanding that if my employer were to do this directly (they buy the bike, not through a third party like Cyclescheme) they are still bound by the FCA regulations so the limit in that situation would still be £1000?
Out of interest, if my employer are buying the bike, is there anything to stop us buying a bike from Germany? There's nothing in the guidance to suggest that, and my understanding from the guidance document is that it doesn't matter where it came from, it's just salary sacrifice for a bike.