Buying a bike through work

Discussion in 'UK and Europe' started by Akme, Apr 23, 2003.

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  1. Akme

    Akme Guest

    Hi,

    first post, and a bit of an enquiry/help needed if anyone can thanks! I recently got my boss to buy
    me a bike through work to commute, which I paid for out of my gross. Accounts are now trying to get
    me to sign over ownership of the bike to the company! Do I have a leg to stand on? Thanks, Andy
     
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  2. Akme wrote:
    > first post, and a bit of an enquiry/help needed if anyone can thanks! I recently got my boss to
    > buy me a bike through work to commute, which I paid for out of my gross. Accounts are now trying
    > to get me to sign over ownership of the bike to the company! Do I have a leg to stand on?

    Surely at worst if you want to keep the bike just pay back the tax!? I wouldn't sign it over if you
    have paid the majority of it! First time I've heard of a bike being bought this way :)

    --
    StainlessSteelRat "Your request is not unlike your lower intestine: stinky and loaded with danger."
    -- Ace Ventura
     
  3. Anonymous

    Anonymous Guest

    > first post, and a bit of an enquiry/help needed if anyone can thanks! I recently got my boss to
    > buy me a bike through work to commute, which I paid for out of my gross. Accounts are now trying
    > to get me to sign over ownership of the bike to the company! Do I have a leg to stand on?

    You're doing a tax dodge. The employer is allowed to provide a bicycle tax free, provided the
    majority of use is for commuting or business. (cf car, where commuting doesn't count). But it's a
    company bike, same as a company car, ie it belongs to the company, not you.

    Now, you took an informal pay cut to pay for this bike. So it could be said that the bike was in
    fact yours, and the employer wasn't paying for it at all, which means it becomes liable to tax.

    What you do depends on how much you trust the company. The tax advantages of them buying the bike
    are significant (did your employer also take note of the VAT and employer's NI when calculating how
    much to shrink your salary? This could take the cost of an 800 GBP bike down to 400 or so to you),
    so if you can trust them that's cheapest. If you can't, then you'll have to pay the tax.

    You may wish to have some sort of written agreement that the bike is for your use only. I think you
    may be able to do this without losing the tax advantages.

    Things get worse if you come to leave the company. In this case making the bike disappear is
    probably your best bet. Provided the employer doesn't actually want the bike (likely), then they
    won't chase it and it will be ok.

    Disclaimer : IANAA or AL. (But I have considered this tax dodge more than once - unfortunately I
    can't take advantage of it at the moment).

    cheers, clive
     
  4. In message <[email protected]>, Akme
    <[email protected]> writes
    >Hi,
    >
    >first post, and a bit of an enquiry/help needed if anyone can thanks! I recently got my boss to buy
    >me a bike through work to commute, which I paid for out of my gross. Accounts are now trying to get
    >me to sign over ownership of the bike to the company! Do I have a leg to stand on? Thanks, Andy

    Well, if you've paid something for it then at least part of it should be yours. I don't understand
    the bit about paying for it out of your gross income. This looks like an attempt to avoid tax and NI
    and the company might well be nervous of the taxman. You should have paid the full price of the bike
    (inc. VAT) out of your net income and received a sales invoice.
    --
    Michael MacClancy
     
  5. In message <[email protected]>, Clive George

    >Now, you took an informal pay cut to pay for this bike. So it could be said that the bike was in
    >fact yours, and the employer wasn't paying for it at all, which means it becomes liable to tax.

    This is directed to the OP. Does the pay cut come to an end when the bike is paid for? In which case
    I would argue that you have been paying for the bike and that it belongs to you, apart from the
    unpaid income tax and NI. On the other hand, if the pay cut is permanent then it looks more like an
    agreed trade-off between salary and bike (just like a rep might trade salary against a better car)
    and the bike should belong to the company. As Clive says, whichever is the case, you should have a
    written agreement and it is for you to decide which is the better deal for you. But you can't own
    the bike and not pay the tax!
    --
    Michael MacClancy
     
  6. Anonymous

    Anonymous Guest

    "Michael MacClancy" <[email protected]> wrote in message
    news:[email protected]...
    > In message <[email protected]>, Clive George

    > >Now, you took an informal pay cut to pay for this bike. So it could be said that the bike was in
    > >fact yours, and the employer wasn't paying for it at all, which means it becomes liable to tax.
    >
    > This is directed to the OP. Does the pay cut come to an end when the bike is paid for? In which
    > case I would argue that you have been paying for the bike and that it belongs to you, apart from
    > the unpaid income tax and NI. On the other hand, if the pay cut is permanent then it looks more
    > like an agreed trade-off between salary and bike (just like a rep might trade salary against a
    > better car) and the bike should belong to the company. As Clive says, whichever is the case, you
    > should have a written agreement and it is for you to decide which is the better deal for you. But
    > you can't own the bike and not pay the tax!

    Pay cut doesn't necessarily need to be a cut in monthly/weekly wages - it could simply be a
    deduction in one month. Which is what I thought the OP had.

    cheers, clive
     
  7. Tim Hall

    Tim Hall Guest

    On 23 Apr 2003 07:58:26 -0700, [email protected] (Akme) wrote:

    >Hi,
    >
    >first post, and a bit of an enquiry/help needed if anyone can thanks! I recently got my boss to buy
    >me a bike through work to commute, which I paid for out of my gross. Accounts are now trying to get
    >me to sign over ownership of the bike to the company! Do I have a leg to stand on?

    Dunno, but I think Russ Pinder (currently hors de combat, get well soon) bought one this way. Mind
    you I think he was also a director of the company that bought it for him. I may be wrong. Try a
    google search.

    Tim
    --

    fast and gripping, non pompous, glossy and credible.
     
  8. Akme

    Akme Guest

    Thanks for the advice, If I got them to depreciate the value of the bike over 12 months and then buy
    it from them for a nominal sum in a year, would that work perhaps? I realise I can't have my cake
    and eat it, but would like to at least try...
     
  9. In message <[email protected]>, Akme
    <[email protected]> writes
    >Thanks for the advice, If I got them to depreciate the value of the bike over 12 months and then
    >buy it from them for a nominal sum in a year, would that work perhaps? I realise I can't have my
    >cake and eat it, but would like to at least try...

    I don't see that you have to if you've already paid a proportion of the bike's value. That much of
    the bike is yours and they would only be depreciating the element that is theirs. They might not
    like depreciating the value too quickly because it would come out of their profits. Anyway, I guess
    the depreciation policy is based on recognised accounting standards.

    You haven't really provided enough information for people to help you much further. What is the
    value of the bike, how much have you paid towards it, how big is the company, can you afford to pay
    the difference, can you ask the company for your money back?
    --
    Michael MacClancy
     
  10. Congokid

    Congokid Guest

    In article <[email protected]>, Akme
    <[email protected]> writes
    >Thanks for the advice, If I got them to depreciate the value of the bike over 12 months and then
    >buy it from them for a nominal sum in a year, would that work perhaps? I realise I can't have my
    >cake and eat it, but would like to at least try...

    Several years back I enquired if my company would buy me a tuxedo as I had to attend several client
    related black tie functions. The cost of the purchase was less than the total sum of the individual
    rentals, so this would have meant recharging less to each particular client, and a suit that fitted
    me at the end of it all.

    I was told it would be classed as a 'benefit in kind' and I would be liable for tax - how much I
    never established, so don't know if it would have been worth it.

    However, the company did operate a 'lifestyle' allowance - originally termed a 'sports & social'
    allowance. This was worth UKP200, eventually rising with each year of service to UKP600, for each
    employee per year. The idea was for staff to join health clubs and the like and payment had to be by
    means of a company cheque.

    Rather than join fitness clubs, the girls in accounts spent theirs at the hairdressers.

    I didn't actually buy a new bike using the allowance, but I did use it to get my existing FW Evans
    regularly serviced (as long as the repair shop would accept a company cheque).

    The system changed over time so we could use our own cash/credit cards and claim it back off the
    company, with a valid receipt, and by the time the scheme closed (last year) I was using the
    allowance to clear my Visa card statement.

    As for the tax implications of the allowance, I'm in the dark, but feel I've probably paid tax on
    it somehow.

    --
    congokid Eating out in London? Read my tips... http://congokid.com
     
  11. Nick Kew

    Nick Kew Guest

    In article <[email protected]>, one of infinite monkeys
    at the keyboard of congokid <[email protected]> wrote:

    > Several years back I enquired if my company would buy me a tuxedo as I had to attend several
    > client related black tie functions. The cost of the purchase was less than the total sum of the
    > individual rentals, so this would have meant recharging less to each particular client, and a suit
    > that fitted me at the end of it all.

    In my first job after graduating, we were expected to wear suit&tie because Clients could be around
    at any time. So they paid us a "clothing allowance", which worked as a tax dodge at the time,
    notionally to offset the additional expense of smart dress.

    One of Gordon Brown's first tax changes was to offer a positive tax break for Company bikes. I
    guess it doesn't get mentioned much because noone has a political point to make about a stealth
    tax break:)

    --
    Axis of Evil: Whose economy needs ever more wars? Arms Exports $bn: USA 14.2, UK 5.1, vs France 1.5,
    Germany 0.8 (The Economist, July 2002)
     
  12. >One of Gordon Brown's first tax changes was to offer a positive tax break for Company bikes. I
    >guess it doesn't get mentioned much because noone has a political point to make about a stealth
    >tax break:)

    Is it a tax break for stealth cyclists? ;-)

    Cheers, helen s

    ~~~~~~~~~~
    Flush out that intestinal parasite and/or the waste product before sending a reply!

    Any speeliong mistake$ aR the resiult of my cats sitting on the keyboaRRRDdd
    ~~~~~~~~~~
     
  13. Your company are trying to pull a fast one! The company I work for operate this scheme and as a
    matter of fact a memo was sent round only last week reminding people of it. It's the governments way
    of encouraging people to get out of their cars by giving a tax break on bikes which are supposed to
    be used mainly for commuting, up to a certain value (£400, I think) With my company they pay for the
    bike and deduct the gross from your salary over 3 months thereby saving you the tax on the value of
    the bike. How a company can claim ownership is beyond belief. YOU'VE paid for the bike, not the
    company. They've paid nothing towards it not even the tax so how can they claim ownership. I'd tell
    them to F**k off. "Akme" <[email protected]> wrote in message
    news:[email protected]...
    > Hi,
    >
    > first post, and a bit of an enquiry/help needed if anyone can thanks! I recently got my boss to
    > buy me a bike through work to commute, which I paid for out of my gross. Accounts are now trying
    > to get me to sign over ownership of the bike to the company! Do I have a leg to stand on?
    > Thanks, Andy
     
  14. Having read some of the other posts, yes you can own the bike and not pay the tax. It's supposed to
    be an incentive. (Not many of these from Gordon Brown). The company has not contributed anything
    financially so how can they claim ownership?! One of the reasons my company are keen to promote it
    is because our financial director is a keen cyclist and is trying to encourage others to ride to
    work. He's never tried to claim ownership and he should know. As an aside, any employee that doesn't
    take up a car parking space - anyone - whether they drive or not, get £2 per day added to their pay
    packet - minus tax, of course. Well, 40 quid a month is better than a kick in the proverbials.
    "Akme" <[email protected]> wrote in message
    news:[email protected]...
    > Hi,
    >
    > first post, and a bit of an enquiry/help needed if anyone can thanks! I recently got my boss to
    > buy me a bike through work to commute, which I paid for out of my gross. Accounts are now trying
    > to get me to sign over ownership of the bike to the company! Do I have a leg to stand on?
    > Thanks, Andy
     
  15. Akme

    Akme Guest

    > I don't see that you have to if you've already paid a proportion of the bike's value. That much of
    > the bike is yours and they would only be depreciating the element that is theirs. They might not
    > like depreciating the value too quickly because it would come out of their profits. Anyway, I
    > guess the depreciation policy is based on recognised accounting standards.
    >
    > You haven't really provided enough information for people to help you much further. What is the
    > value of the bike, how much have you paid towards it, how big is the company, can you afford to
    > pay the difference, can you ask the company for your money back?

    Hi,

    thanks for the help on this but having talked it through with accounts don't think I will be able
    to do much

    the bike is a Dawes Discovery 601, which was £420 as it was the 2002 model. I got the MD to sign
    the cheque and agreed to have the balance deducted from my salary, so I haven't actually paid
    anything out yet.
     
  16. Take my word for it, you're company has no right to a bike that YOU paid. I spoke to my financial
    director yesterday and he laughed, also saying the same. Incidentally there is no limit on the
    amount that is tax deductable. My company just limits it to £500. "Nick Kew"
    <[email protected]> wrote in message news:[email protected]...
    > In article <[email protected]>, one of infinite
    monkeys
    > at the keyboard of congokid <[email protected]> wrote:
    >
    > > Several years back I enquired if my company would buy me a tuxedo as I had to attend several
    > > client related black tie functions. The cost of the purchase was less than the total sum of the
    > > individual rentals, so this would have meant recharging less to each particular client, and a
    > > suit that fitted me at the end of it all.
    >
    > In my first job after graduating, we were expected to wear suit&tie because Clients could be
    > around at any time. So they paid us a "clothing allowance", which worked as a tax dodge at the
    > time, notionally to offset the additional expense of smart dress.
    >
    > One of Gordon Brown's first tax changes was to offer a positive tax break for Company bikes. I
    > guess it doesn't get mentioned much because noone has a political point to make about a stealth
    > tax break:)
    >
    > --
    > Axis of Evil: Whose economy needs ever more wars? Arms Exports $bn: USA 14.2, UK 5.1, vs France
    > 1.5, Germany 0.8 (The Economist, July 2002)
     
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