Cycle scheme - so what happens at the end of the agreement
31 August 2009, 10:05 AM
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Cycle scheme - so what happens at the end of the agreement
Hi,
We are about to buy two bikes through our respective companies.
The agreements reads like we do not own the bikes at the end of the payment term.
So what happenes then, do we give them back having paid for them.
who owns the bikes then, do we give them back, whats the score?
We are about to buy two bikes through our respective companies.
The agreements reads like we do not own the bikes at the end of the payment term.
So what happenes then, do we give them back having paid for them.
who owns the bikes then, do we give them back, whats the score?
31 August 2009, 10:14 AM
#2
Your company will give you the option to purchase the bike, usually for 1 months payment equivalent, will tell you for definite at the end of December when I finish paying for mine and then get a new one.
31 August 2009, 11:25 AM
#3
It's a hire scheme.
In order for the tax breaks/incentives to work, the company purchases the bike then hire's it to you at an agreed rate. It gets the VAT back as in any other company purchase. It's not a "perk" which is why you don't pay tax on it. At the end of the 12 months, the company still own the bike and they can choose to either have you continue paying monthly for it (as a hire) or choose to sell it to you. As they are disposing of assets they can't just give it to you (tax implications) but will pass it on at a (hopefully) fair price. Typically this would appear to be a further months rental.
In order for the tax breaks/incentives to work, the company purchases the bike then hire's it to you at an agreed rate. It gets the VAT back as in any other company purchase. It's not a "perk" which is why you don't pay tax on it. At the end of the 12 months, the company still own the bike and they can choose to either have you continue paying monthly for it (as a hire) or choose to sell it to you. As they are disposing of assets they can't just give it to you (tax implications) but will pass it on at a (hopefully) fair price. Typically this would appear to be a further months rental.
31 August 2009, 01:15 PM
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A mate has just managed to get a Dolan through the scheme. He had to go with Shimano 105 gear to get it in under the £1000 limit.
Looks like he'll be paying around £600-£650 gross out of his salary for it. Taking tax and NI into account he's getting the bike for £500 or less of his net salary.
J.
Looks like he'll be paying around £600-£650 gross out of his salary for it. Taking tax and NI into account he's getting the bike for £500 or less of his net salary.
J.
31 August 2009, 01:33 PM
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Tax free bikes for work through the Government's Green Transport Initiative - Cyclescheme, provider of Cycle to Work schemes for UK employers
Makes my bike deal of the decade 
Most employers opt to sell you the bike and accessories, and you will pay the fair market value; this is the amount that a buyer would pay to a seller to purchase the bike and equipment. Each bike is assessed separately, but in our experience the market shows values to be around 5% of the original voucher value plus VAT. The fair market value cannot be stated before or during the scheme as this could be considered a benefit in kind as hire-purchase does not warrant any tax-relief.
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