Company bike schemes

[Richard Goodman]

A while back we had a discussion about the Inland Revenue's Green Travel Plan tax incentives. Some
people were apparently working in companies that offered schemes involving the employee paying for
the bike from their gross salary (while not owning it). The benefit to the employee was that the net
loss of income (depending on their tax code etc) was only around 2/3rds of the cost of the bike
while the employer also benefitted from reduced employer's NI, and, since it remained a company
bike, they could offset the cost against corporation tax etc.

I'm trying to persuade my employers to offer such a scheme - I know that some posters didn't like it
and would prefer employers to foot the whole cost - but that isn't going to happen in my company and
I still see sufficient advantage in operating it in the way suggested above for it to be
interesting. I would like to hear from anyone who is actually working in a company that offers such
a scheme: What is the company name? Could you provide me with a copy of any Terms and Conditions
document under which the bikes are supplied? Does the company set upper/lower limits on the value of
the bikes if so how much? Over what term does the cost have to be repaid, and under what basis is
the agreement terminated and the bike transferred to the employee if this happens? Anything else of
interest concerning the operation of the scheme in your company?

Thanks for any help.

Rich

 

[Tony]

"Richard Goodman" <[email protected]> wrote in message
news:<[email protected]>...
> A while back we had a discussion about the Inland Revenue's Green Travel Plan tax incentives. Some
> people were apparently working in companies that offered schemes involving the employee paying for
> the bike from their gross salary (while not owning it). The benefit to the employee was that the
> net loss of income (depending on their tax code etc) was only around 2/3rds of the cost of the
> bike while the employer also benefitted from reduced employer's NI, and, since it remained a
> company bike, they could offset the cost against corporation tax etc.
>
> I'm trying to persuade my employers to offer such a scheme - I know that some posters didn't like
> it and would prefer employers to foot the whole cost - but that isn't going to happen in my
> company and I still see sufficient advantage in operating it in the way suggested above for it to
> be interesting. I would like to hear from anyone who is actually working in a company that offers
> such a scheme: What is the company name? Could you provide me with a copy of any Terms and
> Conditions document under which the bikes are supplied? Does the company set upper/lower limits on
> the value of the bikes if so how much? Over what term does the cost have to be repaid, and under
> what basis is the agreement terminated and the bike transferred to the employee if this happens?
> Anything else of interest concerning the operation of the scheme in your company?
>
> Thanks for any help.
>
> Rich

I asked about this type of scheme last year at my company. The idea got shot down because of the
administration overhead that would be required (we've over 3000 employees and if everyone wanted to
do it etc. etc.).

As an alternative I asked for a "Season Ticket" (i.e interest free) loan, but to pay for a bike.
After a little umming and ahhing they agreed and I now have a very nice Dawes Audax + trimmings.

It doesn't solve your problem but it's an alternative if you can't convince your company to go with
your idea.

Tony

 

[Tim Woodall]

On 11 Jun 2003 03:47:29 -0700, Tony <[email protected]> wrote:
> "Richard Goodman" <[email protected]> wrote in message
> news:<[email protected]>...
>> A while back we had a discussion about the Inland Revenue's Green Travel Plan tax incentives.
>> Some people were apparently working in companies that offered schemes involving the employee
>> paying for the bike from their gross salary (while not owning it). The benefit to the employee
>> was that the net loss of income (depending on their tax code etc) was only around 2/3rds of the
>> cost of the bike while the employer also benefitted from reduced employer's NI, and, since it
>> remained a company bike, they could offset the cost against corporation tax etc.
>>

> I asked about this type of scheme last year at my company. The idea got shot down because of the
> administration overhead that would be required (we've over 3000 employees and if everyone wanted
> to do it etc. etc.).
>
And, of course, they couldn't bear the publicity of a 3000 strong company where everybody cycles to
work. After all, the company could probably make the front page/BBC headlines several times a year
as all those politicians from all over the world came to see how they had achieved it.

And then they could sell off 60% of their parking space which ought to pay for a proper "bike shed"
with secure facilities and shower and changing rooms on the remaining parking space and also provide
a nice big bonus for the employees.

No. I can see why it couldn't possibly be done. The thought of three thousand people turning up to
work on a bike tomorrow would just cause chaos. Imaging trying to find your bike when it was time
to go home.

Also think of the people turning up late in the morning because they got a puncture on the way to
work. 3000 people times 10miles average journey must amount to a handful of punctures each morning
(punctures on the way home don't "cost" the company anything so don't count). Maybe the company
would need a van so that the broken down cyclists could be collected. And then you would need a
mechanic at work to repair/fix the bike ready for the evening.

And then maybe half of the cyclists would want/need to use the train for part of their journey. 1500
bikes turning up at a station between 7 and
8:30am. Even with ideal timetabling that is going to be something like 75 bikes per train.[1]

It could all be made to work, but it is far simpler to spend a few hundred million putting an extra
lane on <insert congested Mway here> and be seen to be "doing something".

Regards,

Tim.

[9] This could be a serious concern if wide scale cycle+PT commuting ever took off (in my dreams :-(
). I think it could be made to work on many routes but would require a considerable rethink of
how to fit bikes+people onto the train and how to match them up at the other end.

Maybe we would need to get away from the idea of personal ownership of bikes (or cars for that
matter) so that you pick up a bike at the station and return it to a station (not necessarily
the same one)

--
God said, "div D = rho, div B = 0, curl E = - @B/@t, curl H = J + @D/@t," and there was light.

http://tjw.hn.org/ http://www.locofungus.btinternet.co.uk/

 

[Richard Goodman]

"Paul Saunders" <[email protected]> wrote in message
news:[email protected]...
> My company offers this scheme. it's quite simple really. You choose a bike up to the value of
> £1000, pay for it over 3 months from your gross salary thereby saving the tax. (It's a government
> incentive) The bike is yours
not
> the comapanies. End of story, except to say that the bike should be used 'mainly' for cycling to
> and from work. I say this as in the previous postings there was alot of discussion about the
> bike being the companies property etc. IT'S NOT - You're the one paying for it and it's a tax
> break so the
company
> has no financial input except for 'loaning' you the cost over 3 months in our case.

I couldn't see how it would work like that. The 2003 Act is clear that what it is intending to make
tax free is the usage of a bike, not the purchase of one by an employee. It allows companies to set
off the capital cost against liability to corporation tax, and insists on 'no transfer of asset' to
the employee. If the employee is actually earning the money to repay a loan, as opposed to not
earning it but receiving a non-taxable benefit in kind - the usage of a bike, then that money earned
should be taxable, it seems to me. Your taxable gross salary isn't actually being reduced by the
fact that some it is is used to make loan repayments. Indeed, tax should even be paid on the
interest being saved by having an interest-free loan. I just can't see how loans to purchase
bicycles fit the rules of tax exemption prescribed in the Income Tax (Earnings and Pensions) Act
2003 for cycles and cycle safety equipment (http://www.hmso.gov.uk/acts/acts2003/30001--y.htm#244).

If your company is relying on different provisions, it would be very interesting to know
what they are.

Rich

 

[Paul Saunders]

It says'no liability to icome tax arises by virtue of chapter 10 of part 3 in respect to the
provision for an employee of a cycle etc. That doesn't necessarily mean useage only and not
purchase. Also, offsetting the cost against liability to corporation tax doesn't come into it as the
bike is the employees property, not the companies. I'll find out some more info from our finance
director. "Richard Goodman" <[email protected]> wrote in message
news:[email protected]...
> "Paul Saunders" <[email protected]> wrote in message
> news:[email protected]...
> > My company offers this scheme. it's quite simple really. You choose a
bike
> > up to the value of £1000, pay for it over 3 months from your gross
salary
> > thereby saving the tax. (It's a government incentive) The bike is yours
> not
> > the comapanies. End of story, except to say that the bike should be used 'mainly' for cycling to
> > and from work. I say this as in the previous postings there was alot of discussion
about
> > the bike being the companies property etc. IT'S NOT - You're the one paying for it and it's a
> > tax break so the
> company
> > has no financial input except for 'loaning' you the cost over 3 months
in
> > our case.
>
> I couldn't see how it would work like that. The 2003 Act is clear that
what
> it is intending to make tax free is the usage of a bike, not the purchase
of
> one by an employee. It allows companies to set off the capital cost
against
> liability to corporation tax, and insists on 'no transfer of asset' to the employee. If the
> employee is actually earning the money to repay a loan,
as
> opposed to not earning it but receiving a non-taxable benefit in kind -
the
> usage of a bike, then that money earned should be taxable, it seems to me. Your taxable gross
> salary isn't actually being reduced by the fact that
some
> it is is used to make loan repayments. Indeed, tax should even be paid on the interest being saved
> by having an interest-free loan. I just can't
see
> how loans to purchase bicycles fit the rules of tax exemption prescribed
in
> the Income Tax (Earnings and Pensions) Act 2003 for cycles and cycle
safety
> equipment (http://www.hmso.gov.uk/acts/acts2003/30001--y.htm#244).
>
> If your company is relying on different provisions, it would be very interesting to know what
> they are.
>
> Rich
>

 

[Richard Goodman]

"Paul Saunders" <[email protected]> wrote in message
news:[email protected]...
> It says'no liability to icome tax arises by virtue of chapter 10 of part 3 in respect to the
> provision for an employee of a cycle etc.

Yes, but subject to three conditions the first one of which is "no transfer of the property in
the cycle"

> That doesn't necessarily mean useage only and not purchase.

Chapter 10 of part three deals with taxation of benefits given to employees in kind. If you look at
para 205 of Chapter 10 of part 3 (http://www.hmso.gov.uk/acts/acts2003/30001--t.htm#205) you will
see that that paragraph deals with how tax should be levied on an asset 'made available' but not
transferred. The sense is quite explicit that it is dealing with employer-owned assets that the
employee uses. But no liability to tax arises in respect of cycles made available, however, because
of the exempting provisions in Chapter 3, para 244.

There is also provision for taxation of an asset that _is_ transferred in Chapter 10, at para 206.
There is no exemption from taxation under this provision by virtue of para 244 of Chapter 3,
however, because para 244 specifically requires 'no transfer'. Hence the only exemption from
taxation of benefit in kind that para 244 of Chapter 3 provides in respect of what would otherwise
be a taxable benefit under Chapter 10 is in respect of para 205 - an asset "made available" but not
"transferred"

> Also, offsetting the cost against liability to corporation tax doesn't
come
> into it as the bike is the employees property, not the companies.

True, when it is the employee's property, but if the employer is lending you money to buy a bike
then both the salary being earned to repay the loan and the loan itself can be subject to tax,
notwithstanding the fact that a bicycle is being purchased with the loan, unless there are some
other exempting provisions which I can't find. I think there may once have been something about
this, but it's not in the 2003 Act.

> I'll find out some more info from our finance director.

Be interested to know what s/he says.

Rich