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The only issue in scrapping VAT on bikes (in lieu of C2W) is perhaps the unintended consequence of making them less affordable. I suspect the option to pay monthly without incurring credit charges is a much of an attraction as the tax savings for a lot of people, especially on lower incomes.
It would also be interesting to see how the sums add up in terms of the reduced tax take in scrapping VAT on all bikes regardless of their use, versus income tax lost via C2W.
Also, I suppose a voluntary scheme needs to be attractive as much as it's fair in order to be effective. If it wasn't popular, it wouldn't last long as it the cost of administering it becomes a burden.
Under hybrid bikes at Halfords, there’s a choice of 5 – count ’em! – different hybrid bikes under £750 that aren’t Falcon or Carrera. One that might be ok for my ride, a £600 Boardman hybrid, still comes with nasty Tektro brakes and cheap tyres.
Tell me why I should accept cheap brakes and tyres when I do more miles on my bike than most people do in their expensive cars?
I've done 60 mile rides on my Dew, quite happily, with its Deore/Acera groupset and "nasty" Tektro brakes. I'd say the problem here is snobbery rather than suitability in this case, that and you are clearly the exception not the rule.
As for car schemes, I'd scrap the whole lot for anyone not doing actual business travel.
I’ve done 60 mile rides on my Dew, quite happily, with its Deore/Acera groupset and “nasty” Tektro brakes. I’d say the problem here is snobbery rather than suitability in this case, that and you are clearly the exception not the rule.
This +1.
What I would say is that I notice that the cheaper Acera or Claris is
A) plastic in feel, for the split second you shift for
B) not quite as durable, but that's touchpoints and moving parts. Chainring and cassette last longer being steel.
The only issue in scrapping VAT on bikes (in lieu of C2W) is perhaps the unintended consequence of making them less affordable. I suspect the option to pay monthly without incurring credit charges is a much of an attraction as the tax savings for a lot of people, especially on lower incomes.
Personal view: do both vat and c2w, and limit of £1k + RPI each year.
One that might be ok for my ride, a £600 Boardman hybrid, still comes with nasty Tektro brakes and cheap tyres.
Tell me why I should accept cheap brakes and tyres
Ugh - the one council flat that is at all convenient for me, a 2 bed in Islington, still comes with nasty Wickes bathroom fittings and cheap carpets.
Tell me why I should accept cheap fittings and carpets...
I never understood why this existed for those who don't cycle to work. HMRC quite rightly won't let me dodge tax so why would I subsidise other people's leisure riding? At least change the name and call it a fitness incentive. But then on that basis why can't gym membership or tennis equipment become tax deductible?
My last cylce-to-work purchase was a new drive train from CRC (chain, cassette, chainrings, rear mech) to replace the worn out one on my commuter. I use it every day to/from work, and it was getting annoying how nasty it felt.
I had no idea there was some kind of ethical dimension to it though.
Considering the amount of subsidies motorists get without any thought whatsoever it seems a bit navelgazetastic tbh.
It's not supposed to exist for people who don't cycle to work but having HMRC or employers monitor use would make make the scheme unviable.
tbh, theres no way i would have bought the kenevo if i wasnt able to cyclescheme it, not only do i get it paid up front, i only pay for a fraction of it. i hitch the tagalong and leave that at the school, which saves me blocking someones drive each morning, but im also able to claim my business mileage between sites and since i got it chipped its an absolute hoot. so some of us are actually using them for work.
Can we all stop saying this scheme should be scrapped.
Yes it favours higher earners more than lower earners. BUT... if this was binned, what will we get in it's place ? Answer ? Absolutely nothing. Jezzer kHunt isn't going to produce a new tax break for cyclists is he. No. Only tax dodges for his mates, tax dodging ex chancellors, and for PMs WAGs who gain tens of millions each year for doing ****all yet only pay 30k tax.
1st thing that SHOULD but won't happen is to take VAT off bikes and bike things for everyone. But bikes are for plebs not the rich. So the pleb tax will remain.
Can we all stop saying this scheme should be scrapped
I didn't.
I suggested that we remove VAT and limit the scheme to reasonable costs (currently £1k), and pay for it through VAT on flights.
Considering the amount of subsidies motorists get without any thought whatsoever it seems a bit navelgazetastic tbh.
Eh?
Motorists don't get tax breaks for buying cars do they?
I'm all for subsidising cycling as transport, I just don't think it should be abused for expensive hobbies.
If you take VAT off bikes it should also be taken off all other forms of sport.
I got my Levo through work and commute on it 95%+ of the time. The other <5% of commuting is on my other bike (apart from the weeks last year when I had to take the bus after knocking myself out on my bike).
Motorists don’t get tax breaks for buying cars do they?
I can rent an electric AMG Mercedes with a retail of £114,000 tax free through work
And aren't they still paying a contribution towards new EVs? Less than it was but still a subsidy for the better off motorist and more than you'd ever save on the c2w scheme.
Some interesting reading in this. I'm finally working for a company that offers it and pressed the button on a Brompton yesterday. I only go into the office 2-3 times a week but its a combined train, walk route so hoping the brompton can help add some more fun into it!
Also way easier to sling into the car for when we go away for the weekend.
Motorists don’t get tax breaks for buying cars do they?
Through my employer I could do the C2W scheme with a 5k limit, or via a 3rd party pick up a lease/finance scheme* car with the payments deducted pre tax and NI.
*I dont get the difference as haven't done either
My current C2W bike did over 4000 miles commuting last year*. That's 4000 miles of not clogging the roads up with my car, at a cost to the Treasury of a fraction over £400 unpaid tax this year. The suggestion of not paying VAT on bikes would result in £400 of saving.
The VAT on a £750 bike would be £150. The tax/NI saving on that bike on a C2W scheme is £240, which on many schemes is spread over 18 months - roughly £156 per year.
*I've also not contributed to the tax 4000 miles of diesel but somebody cleverer than me in HMRC probably thinks that it may be worth reducing the number of cars on the road.
Through my employer I could do the C2W scheme with a 5k limit, or via a 3rd party pick up a lease/finance scheme* car with the payments deducted pre tax and NI.
Yes, and you'd pay a ton of beneift-in-kind tax on it unless it's electric. The reason for the electric tax break is to incentivise EVs.
The reason for C2W is to incentivise cycling to work, as explicitly stated, NOT to let people.get fancier hobby bikes.
So clearly there is an ethical dimension to this because you're lying even though you will never be caught. Can't get more of a basic ethical question than that.
Feel free to convince me it's not unethical by the way. I really want a new trail bike and I could have one in a week. Our company's scheme is unlimited.
What would Zahawi do? He'd get that new trail bike.
Yes, and you’d pay a ton of beneift-in-kind tax on it unless it’s electric. The reason for the electric tax break is to incentivise EVs.
My wife's company car costs her about £200 per month, which is significantly less than if she were to finance, tax, insure and service that car.
And yes, EVs...
Haven’t read it all, but of all the massive amounts of tax avoidance that goes on, if the cyclescheme is the one that occupies your thoughts, well i find that quite bizarre.
wow if you are worrying about the ethics of a very small minority (yes it will be) buying a bike on C2W and not actually using it for the majority of journeys to cycle to work I don't know how you sleep at night. If you don't want to use the scheme, don't, but don't go on about how others shouldn't because of your presumption they won't actually use the bike to C2W because it is 'expensive'.
To blow your mind, I have actually ridden my expensive NON c2w bike to work as well!!!!! OMG
Some people ride long distances to work, some ride offroad via the local trails, some only have space for a single bike so choose different bikes to serve their needs / wants. If they want to spend a bundle it is within the rules of the scheme. If it makes you feel better buy the bike and ride it a bit to work, if you live far put it in the boot and ride part way, there is no stipulation on 'how' you comply with the 50% of its journeys to work
Anyway all this talk has got me looking. Seems ribble take halfords vouchers, and no talk of adding a % on top in their blurb. Tempting me to get that gravel bike, with work being close to the New Forest it would be perfect for a long summer commute home
I still think knocking VAT of bikes is a better idea, and if that means other fitness kit, like running trainers then that too. Knocking VAT off would also be much easier to implement, and very hard to abuse, with no middle men pocketing admin fees. Hence it'll never take off.
There did used to be an equivalent scheme for people to get laptops, HCI, which was binned just as I found out about it. Similar concept was labour talking about making wifi free for everyone.
*I do know of people who got their kids bikes on the scheme, I do think that is a little piss taking, but then again they also maximise their pension contributions to retain their child benefit rather than pay it back.
** not me btw
And thats one person in hundreds i know who have used the scheme legitimately
I was working for Halfords when VAT was removed on helmets. It didn't result in a 17.5% discount for the customer. Just an increase in profit for the company (or any other bike shop).
It's the same at the airport duty free. Tax free isn't for the customer, it's the company!
I didn't think of that....surely thats not ethical 🙂
I still think knocking VAT of bikes is a better idea, and if that means other fitness kit, like running trainers then that too.
This has been suggested a few times. Does anyone genuinely think that reducing the cost of 'fitness equipment' will improve the general health of the population, or just increase the amount of barely used fitness equipment taken to landfill in a few years?
Or do the people who suggest it just want their unused gym membership to be 20% less than it is now? 😀
It can't hurt can it? Its like the opposite of imposing higher taxes on sugary drink and food.
But, if companies just trouser the savings as additional profit it will definitely not work
Isn't there trials prescribing obese people gym memberships? Its cheaper than medication
It’s the same at the airport duty free. Tax free isn’t for the customer, it’s the company!
The research into the tampon tax vat cut also supports this. There wasnt a matching reduction in price.
It can’t hurt can it? Its like the opposite of imposing higher taxes on sugary drink and food.
But, if companies just trouser the savings as additional profit it will definitely not work
Isn’t there trials prescribing obese people gym memberships? Its cheaper than medication
I agree with the principle but don't think it would work even if the saving was passed on to the buyer.
I basically view C2W as a way of paying monthly, without involving credit.
I basically view C2W as a way of paying monthly, without involving credit.
This is a point completely missed in the Pavlovian responses above (TAX DODGE!!). For those employees earning more than minimum wage, but not a lot more, this is a good way of spreading the cost of a bike with no credit check. Do not under estimate how important that is to many scheme users.
It's all very well saying that there shouldn't be VAT on this or that but if you haven't got the money to pay for the item in one lump then it's pointless. (Yeah, I know, in the old days people used to save, blah blah...)
Don’t get me started on charitable donations. Same problem…
The reality here is there are many more net benefactors from taxation than net contributors.
Maybe let the contributors have a little of what they’ve earned. The world probably won’t end.
wow if you are worrying about the ethics of a very small minority (yes it will be) buying a bike on C2W and not actually using it for the majority of journeys to cycle to work I don’t know how you sleep at night.
For clarification I'm not worrying about it. I'm just discussing the ethics. I like left wing policies, I support the taxation of the well-off to help reduce inequality and support the less well off. So I can't very well throw that out of the window at the first sign of personal gain, can I?
This is a point completely missed in the Pavlovian responses above (TAX DODGE!!). For those employees earning more than minimum wage, but not a lot more, this is a good way of spreading the cost of a bike with no credit check. Do not under estimate how important that is to many scheme users.
We all agree it's a great idea for the less well off to buy bikes for actual transport. It's fine even for the well off to do so, since that's the point of the scheme as it's designed. And abuse is a small portion of the usage, so it's fine for the scheme to stay. The issue is a personal ethical one.
The reality here is there are many more net benefactors from taxation than net contributors.
And your point is?
Maybe let the contributors have a little of what they’ve earned. The world probably won’t end.
A little bit?
Maybe let the contributors have a little of what they’ve earned.
They already do, don't they?
Join the dark side. Be more Zahawi.
We all agree it’s a great idea for the less well off to buy bikes for actual transport. It’s fine even for the well off to do so, since that’s the point of the scheme as it’s designed. And abuse is a small portion of the usage, so it’s fine for the scheme to stay. The issue is a personal ethical one.
You aren't the only person contributing to this thread, although you do have some mixed messages. (Don't get the C2W bike if you're conflicted!) 😀
Feel free to convince me it’s not unethical by the way. I really want a new trail bike and I could have one in a week.
The issue is a personal ethical one.
Let me help you out then...
Assuming you aren't about to buy a new trail bike anyway, then buying a shiny new MTB on C2W will generate an 20% of it's sale price in VAT, a proportion of the profit will be paid in corporation tax as well. It will contribute towards increasing the turnover of the retailer, ensuring they can continue to employ staff, perhaps hire more. All these things are good for the economy, promoting growth at a local level.
See, you're virtually a saint, thank me later 😉
True, but if I buy one without C2W I will still generate the tax.
My realistic budget would be £2.5k, but if I bought a £5k bike on C2W would I end up putting more tax into the exchequer or boosting the economy more?
Well that depends on how you got the money. If it’s at the highest marginal rate of tax (60%) That 5k would have been 12k of income so 7k tax paid already…
If you have magic money with no tax burden attached to getting it then the bike at half the price will generate half the VAT. It’s the not paying the 7k to get the 5k that gets people frothy.
Now the likelihood is that if you are in that band then you’ll be managing you tax with AVC’s to pension and charitable donations. So it’s arguable if the tax man would have seen it anyway
Personal view: do both vat and c2w, and limit of £1k + RPI each year.
I agree with this. Both of my C2W purchases have been sub-£1k (both £750). First I had for 5 years before selling and was used almost everyday to commute. 2nd bike, bought last year, is also used to commute when I'm in the office, so admittedly a little less, and for other stuff too. I certainly wouldn't be buying a 2-3k bike for commuting simply because I wouldn't want it getting damaged whilst its at work. Personally i see no reason why the limit needs to be higher than £1k, but my employer increased our scheme limit to 3k last year. Was I tempted? Of course, but I have 'enough' bikes for the moment (apparently!!!) and no desire to find myself under the patio 🤣
I'm 40% tax payer. No fancy anything other than a workplace pension. The money would not come out of a savings pot that was somehow obtained without tax. It'd all be paid for via PAYE taxed income. That said, my wife pays much less tax than me so I think that would factor into the calculations...
The retailer still gets the VAT though, as the bike is bought at RRP and has to pay that to HMRC?
A fairly small percentage of the purchase price, say 15% goes to the retailer and onto their employees, who will probably spend it so a fair portion of that 15% goes to the exchequer.
More difficult to establish how much of that extra £2.5k spent goes back into the UK economy, especially when you consider that if I paid it as tax it would go back into the UK economy as well. Now, if it's an Orange the calculation is a bit different....
It's an excellent means of being tax efficient, paying for something without incurring interest, and keeping fit and healthy.
I get some of the complaints re: self employed, but then again, Class 2+4 NICs are lower rates than class 1, and are based on profit rather than income. They also have their self assessment and their tax deductible expenses.
Equally, our taxation system has many cliff edges and biases so I don't think attacking fellow cyclists is the way to go. Take child benefit as an example - a family with one adult working, with an income over £50k starts to lose it, with it disappearing entirely at £60k. A family with two people working, earning £49k each, get to keep it all.
CycleScheme usually allows you to pay fair market value after 4 years, at 7% of package price.
Currently musing about whether I can buy a bike through the business and reclaim the VAT. There's also a Corporation Tax benefit obviously....
Then sell it to myself through the C2W scheme. Not a 40% tax payer though, as I'm a director, so need to suss out how to maximise that element 🤔
I think you'll be charged VAT on hire so no vat saving