Search results for:

I've just been told that I'll buy the bike for £1 or so when I leave and just have to pay tax on the savings I made over full retail price.

Does that seem ok? Not sure how much it will be yet, but accounts seem to think it won't be much.

That's fine. They should presumably give you a P11d showing the value, although the idea of them selling you the bike after you left is interesting (mainly because I can't remember if this would avoid the problem).

Would there be any benefit to doing something along the lines of an operating lease?

It is an operating lease; if it was a finance lease (i.e. if you had the right to buy at the end of the lease, as opposed to your employer offering you the opportunity to buy) the salary sacrifice would be ineffective as it would be consideration ("money or moneys worth").

As for the 25%/7%/no bike thing, you need to look at what your scheme provider does. I'm not familiar with how all the schemes operate, so I couldn't say for sure what the best way around any charges would be.

tom.

Thanks for taking the time and trouble to go through all this.
I do like hearing from people who know their shit.
So if I get my Finance Director to charge me, say, 10% of MV, what are the chances of the taxman bothering to argue over that? Given that they'd have to devote time and energy to checking the claim.
Ta

Well, first off, if your company deliberately sold you something at less than its market value and you deliberately didn't declare it on your Tax Return/P11D, etc, that's pretty naughty. Think fraud/tax evasion; technically you could get a jail term, but in practise you'd have to be John Gotti for them to try and get you like that.

The arse covering bit out of the way, my personal (rather than professional) opinion is that they are probably never going to check, especially if the company is small. However, that said, they randomly review a certain number of payrolls each year to check that society as a whole is operating payrolls correctly.

Market Value is a very subjective thing, it involves willing but not motivated purchasers and sellers and is generally just a best guess. If you think that 10% is a fairer value than 25%, there is nothing to stop your work from selling you the bike at this amount, but it would be useful to have something on file to support that valuation.

A valuation from a bike shop would probably be good, or examples of ended auctions from eBay, but if you had a list of defects and photographic evidence, etc, that would be decent too.

Don't forget that you can have more than one bike from your work under the scheme (subject to the condition that it is "mainly used for work" i.e. commuting) so in some circumstances, depending on the employer's flexibility, you might keep accumulating bikes so that you don't buy any bike after one year. This does get a bit dodgy when you get past two bikes, as the multiple bike thing is meant to be one to get from your house to your local station, one to get from the London station to the office. Makes having seven a bit hard to justify.

Cash sale innit.
I suppose I could charge them 25% storage fee to cancel out the 25% sale price. How would IR deal with that?

Or pay tax on the 25% 'benefit' the HMRC say you have had if you don't pay that balance.

The 25% storage fee you'd receive would be miscellaneous income, chargeable to tax but not NIC. You'd be in the same position as your work slapping the 25% on your P11D

So in summary, regardless of when you signed the contract, from this week onwards you will receive a 25% charge at the end of your rental agreement to take ownership of the bike, plus the admin fee?

No, HMRC's tables are just there to clarify what they think a bike is worth after a certain length of time and should be seen as the values that they won't question. If you want the bike for less, be prepared to have some sort of evidence if HMRC check up on you.

I think that if you're a higher rate tax payer, and you buy a bike for a grand, then you still stand to save between £250 and £400...

But yeah, for those earning a regular salary and buying a bike over £500 it seems like you could get fucked over.

It's also unclear what happens if you used the £1,000 allowance to buy a bike significantly over that sum, presumably you'd only pay 25% on the first £1,000 of the bike (that which your company owns)... otherwise you'd be in for a really nasty surprise when your finance director tells you he wants 25% of a £2k bike that you part-bought on the scheme.

The saving is pretty much wiped out for all people on all income levels, with it being more expensive for people whose employers can't reclaim VAT (I think; I did some calculations months ago, can't remember what happened in all the scenarios).

The value transferred by your employer would need to be calculated. Personally, I think that there is an argument that says that if a bike is worth 25% of its original value after a year, depending on the circumstances in which you "topped up" your voucher, it might be that you could knock this amount off of the 25% meaning that if you bought a bit for £1,333 or more, you'd not have anything to pay at the end.

Bit aggressive though, be prepared to argue about it with HMRC.

I was trying to find some dumb reason to use my voucher since it seemed like such a bargain. The combination of a poor selection in the price range that I have and this change makes it extremely likely that I'll not bother to use it. I'm happy to buy another bike if it's a bargain (always chasing the N+1) but if it's no longer a bargain I really have to want the bike.

If you owned a company, the company could buy the bike and lend it to you with no tax consequences. If you're not in a hire arrangement (i.e. salary sacrifice), the £1,000 limit can be ignored.

This is bullshit. A huge pile of bullshit. I used the scheme because I couldn't afford a bike any other way, and now I'm going to be fucked over anyway. Brilliant. I need someone responsible to blame/insult/threaten.

Just don't buy it at the end. Easy, 25% charge avoided.

You were never meant to be able to buy a bike over a grand.
You shouldn't have been able to add your own cash to the £1k voucher limit as you hire the bike from your employer and you can't hire something that you own part of.
The reason the limit was set at a grand was that that should be more than enough to buy a very decent commuter bike and the limit was placed to stop people buying bikes for competition.
It's just another part of the scheme that was never implemented properly.

I didn't think you could buy anything over a grand on the scheme. As I understood it, the scheme was only for bikes under £1000. That was why all the standard-build Chris Boardman bikes were priced at just under a grand, to catch the top end of the cycle to work people.

^ employers running own scheme can apply for consumer credit license = no limit.

The £1,000 is a credit law thing, as Steve pointed out. Nothing more, nothing less.

tough shit.
i can't see any reason why working people should have tax breaks to buy bikes, if you can a afford to buy a 1k bike for £500 then i don't see the need for a subsidy when a £500 bike will get you to work and back (as would a cheaper second hand bike).

I don't see why people should only pay a maximum of 28% CGT. This is a very minor "tax break" in the grand scheme of things.

best (and most egalitarian) way to encourage cycling (to work and otherwise) is to zero-rate vat on bikes and accessories. cyclescheme was over-complex and a bit of a gift to those with full-time jobs and high salaries...

I agree with this, especially as it currently puts the public sector at a bit of a disadvantage.

I'm 8 months thru a 12 month scheme on a £1000 worth of bike plus equipment...looks like I'll have an expensive month at end of year now (just in time for christmas, yay!)

what i fail to understand, forgive me for my ignorance - is who exactly is going to benefit from this extra money I will now have to pay at the end - presumably my employer (as they own the bike, and the final payment is to transfer ownership to me based on residual value)...if so, why the fuck does HMRC care? Nothing in it for them, not therefore a 'tax loophole'? I'm sure I have this wrong somehow, but would just like to understand the motive behind this from HMRC perspective.

I think that it's just a general "abuse" crackdown, and the additional tax comes from the fact that a higher residual costs means you have to earn more (and pay more tax) to be able to meet it out of your net salary.

Alternatively, if it goes on your P11D, the tax on the benefit is five times as much on 25% as 5%.

I have read some of the posts on this subject and cunt quite get the jist of whats goin on as i am a townie. when i buy a bike from the scrap yard th tax man dosnt get involved in what i ride. I am a businesss owner and dont declair any cycling expenses even thogh i get the full benefit of the fitness that comes with cycling. What is all this bxxxxks about. Please fill me in as i am only a townie

As a business owner you cannot sell on used assets for less than their market worth. The bikes are owned by the business and hired to the employee. At the end of the hire period so far businesses have disposed of the bikes for no cost declaring that the worth is below the amount taken during the hire period. Rolls Royce operated a huge C2W scheme and the taxman got suspicious about this write-down of assets and investigated and decided that the depreciation is less than expected and that the business shouldn't value the bike at less than 50% worth after only 12 months... they took the view it should be 75% worth. What this means is that either you have to buy the bike from your employer for the remaining cost of 25%, or that you received a perk from your employer to the tune of 25% of the value. If the latter then the taxman hits you with a bill as you received a taxable perk, and if the former your company hits you with the bill. All because, a company isn't allowed to dispose of assets for less than their market worth, and what has been subject to interpretation is the market worth of a 2nd hand bike after 12 months.

You can't get tax breaks for fitness. The tax man's involvement is because your employer selling you a bike is a related party transaction, so certain rules (market value, etc) override the actual money that changes hands.

As I said earlier, if MV is less than 25% then it's fine to transfer it at that.

Employers may still 'tweak' their schemes to adapt to the new rules. The 1 year Rolls Royce scheme has just had an optional free hire period added to the end of it. This is where you sign a second agreement and continue to hire your bike for another couple of years but with no monthly cost. Then you transfer ownership after three years rather than one at a lower market value.

Thanks Velocio - and Ramaye that is an interesting point

the only other tweak i can think that may be appropriate is that the 12 monthly payments (which in my case = £1000 in total) could be reduced so that the monthly payments = 75% of the value of the package, then the 25% payable at the end makes it up to the total amount that the 'loan' was for, so the employer does not lose out, and meets the requirements for appropriately valuing the asset for the purchase of the used equipment.

Not aware of any requirement that says the monthly payments must equal the amount of the loan? Surely the employer can 'rent' the equipment out for whatever they want?

Both good ideas, as the 1 year hire period is actually just a one year payback period for the company (i.e. them recouping the expenditure on the bike). Your employer doesn't have to charge you to use the bike; they could just buy a shit load of bikes and lend them to staff.

We recently had a demo by a provider who mentioned this, they are just going to ask for a picture of the bike at the end of the scheme, if the bike looks covered in mud and like it's not been looked after they will be charging well below the hmrc guidelines.

This is the thing to remember, it's just guidelines, if you can provide good reason why the bike is worth less you shouldn't have to pay as much. (the brakes broke so it's not road legal anymore... It's been in a crash...)... Also of note:

so everyone should just get a made to measure frame and then claim it won't fit anyone else :)

Made to measure probably won't cut it (unless you're freakishly tall/short/etc) but if you've crashed a carbon frame, that's probably worthless as no one is going to buy that.

I fail to understand why bikes should follow a depreciation pattern different fro mmost everything else. Usually the more expensive, the quicker things depreciate. Here the HMRC have decided that a £1000 bike will depreciate slower than a £500 bike. It's bollocks.

However. Starting the scheme on Jan 2nd with 20% VAT will make it a little less bad.

There is not "standard" depreciation pattern for anything, perhaps you mean Capital Allowances? Totally different things.

Depreciation is item specific, so for HMRC to split bikes into two categories is totally reasonable.

I want an air rifle for the passing drunk riff raff that passes my window at 3 in the morning waking me up...

Or a paint ball gun with water filled pellets (leaves no evidence)

Urine would be funnier.

If only there was a photo of that time I almost cut Dale's fingers off...

Is anyone going to this from London, specifically anyone that is planning on driving?

Great line-up (Discharge, Dillinger Escape Plan, earthtone9, Paradise Lost, Alcest, etc) but, as with anything outside London, travel is going to be a pain (especially if you want to come back down after the show).

Yes, I can imagine that the rider moves the pad to the correct position during the crash.

Or, and I'm not saying that this is the right or only way to do it, I'd turn the bars to work out where they foul the top tube and move the pad to that point when I changed the bars over, rather than waiting until I was crashing.

They will hit the top tube, but like you said, not in the spot where the pad is.
Maybe sometimes he runs drops, like he should on that bike.

The owner could just move the pad though. Kashimax pads take literally seconds to reposition.

lotus carbon MTB ... for the hour off road record !

Wow, that's pretty old. 94 I'd guess, perhaps '93. I saw one of these in a shop in Chorley Wood once - it pretty much blew my mind.

Picked up a CD by these guys on a whim (it was cheap) and I'm enjoying it quite a lot - to me it sounds like a toned down and slightly blackened version of someone like Highrise or Mainliner.

http://www.youtube.com/watch?v=8Gjt4WjeyQk

the fucking bars dipshit.

i'm only being harsh because you're insinuating.

At the risk of missing a in-joke, surely the bars fitted aren't going to hit the top tube at all and the stem - although it appears that it may hit the top tube - doesn't look like it would hit it where the pad is.

I dont mind going to carling academy as long as I get to see Mayhem. My tutor just set us a challenge to go and review a 'rock' gig for next week.
Any suggestions?

London, right? Saturday night, Scar Studios (Camden) Astrohenge + support (could end up being mental)

There is also some stuff happening in Milton Keynes (A Holy Roar night, with some very good bands playing) and Damnation Festival in Leeds (with some very, very, very good bands playing).

It looks like next year's Single Speed World Championships are going to be held in Ireland, which is just a drive and a ferry away.

Given that this is the only World Championship level race that I am/will ever be allowed to enter, I thought that I might head over and get schooled by some very, very fast riders and I wondered if anyone else fancied going.

If there is enough interest, might it even be worth fielding a LFGSS team? (Not that I'd necessarily make the cut).

Also, if anyone (i.e. Dave K) wants to get a Forward Components (http://www.forwardcycle.com/) eccentric BB in for a forum test and needs someone to race test it, I'll happily volunteer as it looks like a much cleaner conversion method than a Singulator (or similar).

That's not what I was thinking of. I was thinking of a Quasar (it's just come to me). Clearly though, you are right and I am wrong.

I'm sure that it used to mention Godzilla in the instructions for getting to Japan once.

I am feeling slightly less certain about my Girvin assertion, having just seem some Vector 2/3s.

This can f**k off:

Frame is an STS Downhill, forks aren't Girvins (which had an integrated stem). The name of these escapes me - perhaps Scott can remind me what they are called - I seem to remember that they were made in the UK if that helps.

Cranks look a bit like Middleburns? Brakes are Maguras. I'm not sure about the wheels.

While hardly an aesthetically perfect bike, it's better than another shitty conversion with a 650c and a 700c where two 27" wheels should be. I wouldn't have hesitated to stab someone for that bike in... 1996 I guess. If it's earlier than that it's technically not an STS, it's actually got a different name (despite being the same bike).

Almost...
Richard Cunningham already owned Mantis and made the elevated stay frames as custom jobs.
He designed frames for Nishiki to mass produce.
Both used bolted on steel rear ends and aluminium fronts in an attempt to use the best properties of both materials.
Something which Gary Fisher also did on the CR7.

I loved the look of the old Mantises, with the monocoque (or perhaps half and half, like the old Mountain Cycles) front end. What was the name of the full suspension one he did - Pro Floater or something?

Chris Squire as an all time favourite

YouTube - Yes - Long Distance Runaround

John and James from Palehorse get an honourable mention for the relentless riffing

YouTube - palehorse - we cannot love you

Lots of pressure being a bass player tho', I've done it a few times... //but I'm not a natural...

Neither am I, so I just run around as much as possible and hope people don't notice. Just ask Dale.

Why is the Nishiki a 'classic'

Weren't the Nishikis designed by Chris Cunningham or whatever his name was, and based on the design that would eventually become the Mantis range?

This is half statement/half question because experience has taught me that Mr. Grobag's experience of early to mid-nineties MTBs dwarfs mine.

Slightly OT but anyone going to Unbroken/Disembodied/Rot in Hell tonight?

I went, it was an alright show. I'd checked this thread I would have tried to meet you to say hi.

I've still got a steel Commencal Absolut for sale if anyone is after one of those. One day I will both putting it on Ebay.

So jealos, once my exams are over I'm going to be all over Swinley, Dorking, etc.