[Closed] Cycle2Work - Concerns over fair market value

HMRC guidelines state 5% of original value IIRC

To establish the fair market price, employers should obtain quotes from local bike shops as the value of the bike will partly depend on the level of use

Is what it reckons on the website for cycle2work.
If it always just 5% then that is good news!

Mine was 5%. I have heard of someon calling his bosses's bluff and refusing to buy the bike at the end, then getting a freebie: remember the bike might effectiovely be worth nothing to the company, what are they going to do with it if they don't sell it to you?

Can't claim personal experience, but I know 3 people who have used the scheme (2 different employers), and in all cases the final "buying the bike for fair market value" is deemed too costly to administer, so they never actually paid anything...

The above is correct, and if you employer did try to pull a fast one, send them an intemised bill for all the hours of labour it's taken to keep it in that condition. After all if it was truly being hired then the maintenance would be their responsibility surely?

Got a £1000 voucher. Company sold it to me for £50.

I also had a voucher for £1000.00 and paid £50 + VAT

thisisnotaspoon; that actually seems like a fair point. Inevitably you will need to have paid for things so I suppose that would be fair.

It sounds like its pretty much 5% then. Not bad at all really. Seems like somewhere in the order of £350 off a boardman pro, not to mention the 0% finance for a year. You can't complain can you!

£35 here, on a £1000 voucher.

5% here too.

thisisnotaspoon - Member

The above is correct, and if you employer did try to pull a fast one, send them an intemised bill for all the hours of labour it's taken to keep it in that condition. After all if it was truly being hired then the maintenance would be their responsibility surely?

I'm pretty sure the t&cs with mine state that I'm responsible for all maintenance and subsequent costs.

When we set up our scheme HMRC vetted the documentation and requested we remove any reference to the approximate value of the bike at the end of the hire period and that 5% would not automatically be accepted. So theoretically this is a risky area. However, 5% has been accepted in many cases as a fair transfer value. If this is a problem your employer can continue to let you use the cycle without transferring ownership.

had a £1800 bike on scheme paid £25+vat for it after 12 months

flatback - That' a great deal. Works out at 1.39%. Lets hope the IR don't do an audit! 😯

I didn't pay a penny for mine.

we have just had ours cancelled due to the IR telling us we had to get three independent quotes and take the average. This is how is should be done apparently. The powers that be are negotiating a change to the IR rules as most companies are in breach of the rules.

Evans website is particularly vague on the subject deliberately i woukld guess.

IR are due back in mid october, so hopefully we will find out then, but to be strictly within the rules you must get three independent bike shop quotes and take the average.
I can see the shops charge for that quote, if they will do it at all....

humpf... just had my bike nicked then they closed the scheme....

Interestingly, my GF works for the home office, they haven't yet got the GOVERNMENT scheme.....

All the gen is here..

http://www.dft.gov.uk/pgr/sustainable/cycling/cycletoworkschemeimplementat5732?page=1#a1014

http://www.hmrc.gov.uk/paye/exb/a-z/a/assets-transferred.htm

So how much does it cost on the scheme?
Eg a £1000 bike, what is the approx monthly cost? Is it over a year or 2 years?

what does it cost?
1000 pound voucher costs 851 quid after tax which is 47.28 per month over 18 months out of your salary before tax.

£1 here on a £1000 voucher..

5% here on £750 voucher.

[i]After all if it was truly being hired then the maintenance would be their responsibility surely? [/i]

Of course not unless it's in the contract.

the rule used to expect it to be about 5% but that was not a rule, which is why some people like myself paid a very small amount to get the bike in the end, new rules state a quote from 3 bike shops, so as a rough guess £1000 bike on a scheme you are runing yourself, company knocks of vat and then your tax saving,you pay about £600 for a basic tax payer, use it for a year,local bike shop says its worth £400, 600 + 400 =1000and you havent saved anything, with the new rules??

Beginning of the end.
Gonna be a pisser for the frame only purchasers and how many lbs' would know the fair market value of sh bikes? None in Perth sell them.

Stop worrying and do it.

Never heard of anyone getting stitched up.

10% on mine as Bikes For The NHS are shit.

You may need to start worrying if the revenue come into your place of work to do an audit then find that you have received a benefit in kind (ie a bike being transfered to you for way less than its second hand value), you could end up with an unexpected tax demand.

just finished mine they just took a 13th payment seems fair

5% at my work.

Can you 'top up' over and above the £1000? Fancy a Roscoe at 2500, using the cyclescheme, but unsure if I can.

Technically no, and certainly not if your workplace use Halfords.
You'd probably have to be chummy with the shop you were buying from, and they'd be breaking the rules (and law?) if they let you do it.
And anyway, as the bike is owned by the company until they choose to let you purchase it from them, who'd own the excess amount in the meantime?!?

Stoopid Q, but what if you had a £1000 voucher but spent half of it on lights and accessories etc and £500 on a bike, would they only charge you 5% or fair market value of the bike @ £500??