Company Loans for Bicycles

Discussion in 'UK and Europe' started by Nigel, May 1, 2003.

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  1. Nigel

    Nigel Guest

    Currently my company offers loans for employees to buy season tickets for public transport or cars.
    My wish is to have them expand the scheme to include bicycles..as anyone out there have experience
    of helping a company set up such a scheme or running a scheme. Looking at previous posts it also
    looks like there is a tax allowance allowed for bicycle purchases this way, is this right?

    The company is fairly cycle friendly with covered cycle racks and showers provided were possible at
    all sites, so I can't see it being too much of a problem.

    Also we have a large base in London, would we be benefit from having corp membership of an org' such
    as the LCN. We do have lots of other sites across the UK..so is there a more suitable org who could
    provide benefits that the LCN provides for members

    Look forward to all your great advice

    Nigel

    PS the scheme wouldn't benefit me as I have just bought a lovely shiny new Condor Itali today...only
    a week till I pick it up!!!!!
     
    Tags:


  2. In message <[email protected]>, Paul Saunders
    <[email protected]> writes
    >If a bike is used mainly for commuting to and from work you can get a tax concession on it. My
    >company limits it to £500, but my financial director (who is a keen cyclist) says that there is no
    >limit. The company buys the bike and you then pay them back over a given period (3 months in our
    >case) from your gross pay, thereby saving the tax.

    Can someone point me towards an official looking document that describes this scheme? I can find
    loads of references that a company is allowed to lend cycles to employees for them to travel into
    work, provide free cycle parking and even occasional cyclists' breakfasts but nothing that describes
    this 'purchase' scheme.

    Thanks.
    --
    Michael MacClancy
     
  3. Terry

    Terry Guest

    "NIGEL" <[email protected]> wrote in message news:[email protected]...
    > Currently my company offers loans for employees to buy season tickets for public transport or
    > cars. My wish is to have them expand the scheme to include bicycles..as anyone out there have
    > experience of helping a company set up such a scheme or running a scheme. Looking at previous
    > posts it also looks like there is a tax allowance allowed for bicycle purchases this way, is
    > this right?
    >
    > The company is fairly cycle friendly with covered cycle racks and showers provided were possible
    > at all sites, so I can't see it being too much of a problem.
    >
    > Also we have a large base in London, would we be benefit from having corp membership of an org'
    > such as the LCN. We do have lots of other sites across the UK..so is there a more suitable org who
    > could provide benefits that the LCN provides for members
    >
    > Look forward to all your great advice
    >
    > Nigel
    >
    > PS the scheme wouldn't benefit me as I have just bought a lovely shiny new Condor Itali
    > today...only a week till I pick it up!!!!!

    Bloody good idea, i may try that at work and see what happens, i folding would be cool as i can't
    see them funding a titanium Litespeed somehow.
     
  4. Tim Woodall

    Tim Woodall Guest

    On Thu, 1 May 2003 18:25:33 +0100, Michael MacClancy <[email protected]> wrote:
    > In message <[email protected]>, Paul Saunders
    > <[email protected]> writes
    >>If a bike is used mainly for commuting to and from work you can get a tax concession on it. My
    >>company limits it to £500, but my financial director (who is a keen cyclist) says that there is no
    >>limit. The company buys the bike and you then pay them back over a given period (3 months in our
    >>case) from your gross pay, thereby saving the tax.
    >
    > Can someone point me towards an official looking document that describes this scheme? I can find
    > loads of references that a company is allowed to lend cycles to employees for them to travel into
    > work, provide free cycle parking and even occasional cyclists' breakfasts but nothing that
    > describes this 'purchase' scheme.
    >
    And can someone tell me if it can be applied retrospectively (only a couple of months in my case)

    Regards,

    Tim.

    --
    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/
     
  5. "Paul Saunders" <[email protected]> wrote in message
    news:[email protected]...

    > If a bike is used mainly for commuting to and from work you can get a tax concession on it. My
    > company limits it to £500, but my financial director (who is a keen cyclist) says that there is no
    > limit. The company buys the bike and you then pay them back over a given period (3 months in our
    > case) from your gross pay, thereby saving the tax.

    So you could potentially buy a £2k carbon fibre racer and only have £1200 taken out of your net pay,
    with HM Govt footing the other £800?

    There *must* be a catch somewhere!!
     
  6. Nc

    Nc Guest

    "Michael MacClancy" <[email protected]> wrote in message
    news:[email protected]...
    > In message <[email protected]>, Paul Saunders
    > <[email protected]> writes
    > >If a bike is used mainly for commuting to and from work you can get a tax concession on it. My
    > >company limits it to £500, but my financial director (who is a keen cyclist) says that there is
    > >no limit. The company buys the bike and you then pay them back over a given period (3 months in
    > >our case) from your gross pay, thereby saving the tax.
    >
    > Can someone point me towards an official looking document that describes this scheme? I can find
    > loads of references that a company is allowed to lend cycles to employees for them to travel into
    > work, provide free cycle parking and even occasional cyclists' breakfasts but nothing that
    > describes this 'purchase' scheme.

    You don't get much more official than HM Treasury:

    General Leaflet: http://www.inlandrevenue.gov.uk/pdfs/emp2001/ir176.pdf

    Top level website: http://www.inlandrevenue.gov.uk/cars/green_travel.htm

    What is actually in the finance act (aka. budget):
    http://www.hmso.gov.uk/acts/acts2003/30001--y.htm#244

    All of which seems to confirm the story - company can purchase the bike for you, provided you
    commute on it, and you pay no benefit in kind. There is no mention of an upper limit in value.

    Note Condition (A) in the third URL above about "not transferring the property", I read this to mean
    the bike has to be property of the employer.

    The dodge which Paul Saunders describes appears to involve reducing your pre-tax gross salary by the
    price of the bike (ie. sacrificing salary for the benefit of a bicycle). Your take-home is reduced
    by considerably less than the price of the bike, but you do also suffer a marginal cut in NI
    contributions which might affect your benefit/pension entitlements (if you care about this, take
    advice). This is OK provided the bike is property of the employer; the reduction in gross salary is
    a private matter, varying your contract.

    In order for you to own the bike, the employer needs to sell it to you in such a way that you don't
    pay twice: After some time - say a year or two - , the company declares the bike "written off" and
    sells it to you for a peppercorn amount of scrap value, reduced by the costs the employer might
    otherwise incur trying to sell it (shall we say 5% of its new price?).

    (My employers, a very big UK plc, are doing a similar dodge "lending" staff computers for home use
    with a salary sacrifice deduction, then allowing them to be bought after three years for less-than
    5% of their new price).

    NC (not an accountant or tax lawyer, so take proper advice, just my personal reading of the rules).
     
  7. Tony Raven

    Tony Raven Guest

    In news:[email protected], Adrian Boliston <[email protected]> typed:
    >
    > So you could potentially buy a £2k carbon fibre racer and only have £1200 taken out of your net
    > pay, with HM Govt footing the other £800?
    >
    > There *must* be a catch somewhere!!

    There is - it has to be used mainly for business purposes including commuting and be available
    for use by other employees. Under those circumstances the bicycle does not become a taxable
    benefit in kind.

    As I understand it the company can *loan* you a bike without it becoming a benefit in kind. However
    they would need to buy a bike and what I think is happening here is the company is saying that I
    won't pay for it but if you agree to take a reduction in taxable pay I will use the money I save to
    buy a bike which I will make available to you. Don't forget that most companies will save tax and NI
    plus can reclaim VAT and capital allowances

    The details are at http://www.inlandrevenue.gov.uk/pdfs/emp2001/ir176.pdf

    Tony

    --
    http://www.raven-family.com

    "All truth goes through three steps: First, it is ridiculed. Second, it is violently opposed.
    Finally, it is accepted as self-evident." Arthur Schopenhauer
     
  8. In message <[email protected]>, Tony Raven <[email protected]> writes
    >In news:[email protected], Adrian Boliston <[email protected]> typed:
    >>
    >> So you could potentially buy a £2k carbon fibre racer and only have £1200 taken out of your net
    >> pay, with HM Govt footing the other £800?
    >>
    >> There *must* be a catch somewhere!!
    >
    >There is - it has to be used mainly for business purposes including commuting and be available
    >for use by other employees. Under those circumstances the bicycle does not become a taxable
    >benefit in kind.
    >
    >As I understand it the company can *loan* you a bike without it becoming a benefit in kind. However
    >they would need to buy a bike and what I think is happening here is the company is saying that I
    >won't pay for it but if you agree to take a reduction in taxable pay I will use the money I save to
    >buy a bike which I will make available to you. Don't forget that most companies will save tax and
    >NI plus can reclaim VAT and capital allowances
    >
    >The details are at http://www.inlandrevenue.gov.uk/pdfs/emp2001/ir176.pdf
    >
    >Tony
    >

    Thanks to everyone for the information. It confirms my suspicion that companies seem to be
    misleading people about this scheme. The fact is that you can have use of a bike owned by the
    company and not pay any tax on the benefit. If the company is asking the employee for money towards
    the cost of the bike this does not mean that the employee owns the bike. At some stage the company
    will need to transfer ownership to the employee and some sort of further payment will probably be
    necessary. The company's ability to write down the value of the bike is going to be limited by tax
    rules so it would appear to be unrealistic to expect to buy the bike for a pittance after a short
    period. If the Inland Revenue's attention is drawn to the fact that companies and employees are
    using this tax concession to allow employees to buy bikes cheaply then you can expect them to clamp
    down on the practice. If I was an employee considering this scheme I would be very careful. Anyway,
    it's better to persuade the company to pay for the bike and lend it to you. That's the spirit of the
    law, the company has the ownership risk and pays for insurance and maintenance and you get to use a
    bike for nothing. OK, when you change employer you lose the bike but that's what happens with
    company cars anyway.
    --
    Michael MacClancy
     
  9. [email protected] (NIGEL) wrote in message news:<[email protected]>...
    > Currently my company offers loans for employees to buy season tickets for public transport or
    > cars. My wish is to have them expand the scheme to include bicycles..as anyone out there have
    > experience of helping a company set up such a scheme or running a scheme. Looking at previous
    > posts it also looks like there is a tax allowance allowed for bicycle purchases this way, is
    > this right?
    >
    > The company is fairly cycle friendly with covered cycle racks and showers provided were possible
    > at all sites, so I can't see it being too much of a problem.
    >
    > Also we have a large base in London, would we be benefit from having corp membership of an org'
    > such as the LCN. We do have lots of other sites across the UK..so is there a more suitable org who
    > could provide benefits that the LCN provides for members
    >
    > Look forward to all your great advice
    >
    > Nigel
    >
    Nigel, my company operates such a scheme. We can get an interest free loan to the value of £500 to
    buy "a bicycle and accessories" and pay it back over 10 months. It operates in exactly the same way
    as a loan to buy a car, or season ticket, or car-parking permit - the company also offers these at
    interest-free spread over 10 months. The money is deducted by payroll and appears in the
    "deductions" columm of my payslip.

    This way it's nice and simple. There are no tax complications (AFAIA). I assume that these figures
    are plucked out of thin air with a view to ensure that the loan will be repaid - I've just
    remembered, the monthly repayments cannot be more than 10% of your monthly pay. All the usual
    clawback clauses are inserted.

    It's not very well publicised. And there was once a rumour that our LBS gave 10% off the price to
    employees, but I haven't heard anything else about this. Now, if only I could persuade my LBS to
    stock some high end kit :)

    HTH SteveP
     
  10. In message <[email protected]>, Richard Goodman
    <[email protected]> writes
    >
    >"NC" <[email protected]> wrote in message news:[email protected]...
    >
    >> The dodge which Paul Saunders describes appears to involve reducing your pre-tax gross salary by
    >> the price of the bike (ie. sacrificing salary for the benefit of a bicycle). Your take-home is
    >> reduced by considerably less than the price of the bike, but you do also suffer a marginal cut in
    >> NI contributions which might affect your benefit/pension entitlements (if you care about this,
    >> take advice). This is OK provided the bike is property of the employer; the reduction in gross
    >> salary is a private matter,
    >varying
    >> your contract.
    >>
    >> In order for you to own the bike, the employer needs to sell it to you in such a way that you
    >> don't pay twice: After some time - say a year or two -
    >,
    >> the company declares the bike "written off" and sells it to you for a peppercorn amount of scrap
    >> value, reduced by the costs the employer might otherwise incur trying to sell it (shall we say 5%
    >> of its new price?).
    >>
    >
    >That sounds like an excellent summary. So that means if I normally gross, say £27,900 pa, and get
    >my employer to buy a bike costing £900 for my use and take it out of my salary as a private
    >arrangement, my gross for tax/NI purposes, becomes £27,000 in the year of purchase? That would mean
    >netting about £600 less, saving a third of the cost of the bike. If I then buy it off my employer
    >for 5% of its new value after a year, that's another £45 so I'll have saved around £250 on the
    >normal new price? My employer also gains a bit because they'll pay slightly less in employer's
    >NICs, since my taxable salary is less, and they get to sell a bike they never paid for in the first
    >place for a nominal sum?
    >

    I'm not a tax expert but I do run a business and I think that the picture is a bit more complicated
    than the interpretation given above.

    The company does much better than explained above because it probably doesn't pay VAT on the bike.
    It gains as soon as you part with your £900 and again when you pay your £45. The transactions you
    describe result in (approximate figures) a gain for you of about £255 and a gain for the company of
    about £172 balanced by losses for the Inland Revenue of £300 and Customs & Excise of £127. (This
    neglects NI and Corporation Tax).

    I suspect that both the Inland Revenue and Customs & Excise will spot this trick and prevent the
    employer writing off 95% of the bike's value in a single year or else find a way of taxing
    someone (company or employee) for the benefit. As with company cars the sale to the employee
    should take place at a market price. I don't think bikes worth having depreciate as quickly as
    computers, do they?

    As I've written before, the idea behind the 'official' scheme is that the company should lend the
    bike free of charge and tax. If you fulfil the requirements of the scheme vis-à-vis commuting then
    why not persuade them to operate the scheme properly or at least in such a way that employer and
    employee share the costs more fairly?

    --
    Michael MacClancy
     
  11. "NC" <[email protected]> wrote in message news:[email protected]...

    > The dodge which Paul Saunders describes appears to involve reducing your pre-tax gross salary by
    > the price of the bike (ie. sacrificing salary for the benefit of a bicycle). Your take-home is
    > reduced by considerably less than the price of the bike, but you do also suffer a marginal cut in
    > NI contributions which might affect your benefit/pension entitlements (if you care about this,
    > take advice). This is OK provided the bike is property of the employer; the reduction in gross
    > salary is a private matter,
    varying
    > your contract.
    >
    > In order for you to own the bike, the employer needs to sell it to you in such a way that you
    > don't pay twice: After some time - say a year or two -
    ,
    > the company declares the bike "written off" and sells it to you for a peppercorn amount of scrap
    > value, reduced by the costs the employer might otherwise incur trying to sell it (shall we say 5%
    > of its new price?).
    >

    That sounds like an excellent summary. So that means if I normally gross, say £27,900 pa, and get my
    employer to buy a bike costing £900 for my use and take it out of my salary as a private
    arrangement, my gross for tax/NI purposes, becomes £27,000 in the year of purchase? That would mean
    netting about £600 less, saving a third of the cost of the bike. If I then buy it off my employer
    for 5% of its new value after a year, that's another £45 so I'll have saved around £250 on the
    normal new price? My employer also gains a bit because they'll pay slightly less in employer's NICs,
    since my taxable salary is less, and they get to sell a bike they never paid for in the first place
    for a nominal sum?

    Rich

    Rich
     
  12. "Michael MacClancy" <[email protected]> wrote in message

    ..
    > If the Inland Revenue's attention is drawn to the fact that companies and employees are using
    > this tax concession to allow employees to buy bikes cheaply then you can expect them to clamp
    > down on the practice. If I was an employee considering this scheme I would be very careful.
    > Anyway, it's better to persuade the company to pay for the bike and lend it to you. That's the
    > spirit of the law, the company has the ownership risk and
    ..

    I suspect if they stop it at all it won't be because of this but because of political lack of will
    to continue pursuing tax concessions on 'green travel'. As to being better to persuade the company
    to pay for the bike and lend it, I absolutely agree this would be a better option but it would be
    an unviable option in many cases. My company might be persuaded to do something that doesn't
    actually cost them anything and might in fact give them some small gain, but there is no way they
    would provide even a single company bike at their own expense (and in fact the policy requires the
    scheme to be open to all employees)! I think if the IR really wants to promote green travel through
    the policy, they would have to accept the use of such a 'dodge' to make anything be acheived out of
    it at all.

    Rich
     
  13. "Michael MacClancy" <[email protected]> wrote in message
    news:[email protected]...
    > In message <[email protected]>, Richard Goodman
    > <[email protected]> writes
    > >
    > >"NC" <[email protected]> wrote in message news:[email protected]...
    > >
    > >> The dodge which Paul Saunders describes appears to involve reducing
    your
    > >> pre-tax gross salary by the price of the bike (ie. sacrificing salary
    for
    > >> the benefit of a bicycle). Your take-home is reduced by considerably
    less
    > >> than the price of the bike, but you do also suffer a marginal cut in NI contributions which
    > >> might affect your benefit/pension entitlements (if
    you
    > >> care about this, take advice). This is OK provided the bike is
    property
    > >> of the employer; the reduction in gross salary is a private matter,
    > >varying
    > >> your contract.
    > >>
    > >> In order for you to own the bike, the employer needs to sell it to you
    in
    > >> such a way that you don't pay twice: After some time - say a year or
    two -
    > >,
    > >> the company declares the bike "written off" and sells it to you for a peppercorn amount of
    > >> scrap value, reduced by the costs the employer
    might
    > >> otherwise incur trying to sell it (shall we say 5% of its new price?).
    > >>
    > >
    > >That sounds like an excellent summary. So that means if I normally
    gross,
    > >say £27,900 pa, and get my employer to buy a bike costing £900 for my use and take it out of my
    > >salary as a private arrangement, my gross for
    tax/NI
    > >purposes, becomes £27,000 in the year of purchase? That would mean
    netting
    > >about £600 less, saving a third of the cost of the bike. If I then buy
    it
    > >off my employer for 5% of its new value after a year, that's another £45
    so
    > >I'll have saved around £250 on the normal new price? My employer also
    gains
    > >a bit because they'll pay slightly less in employer's NICs, since my
    taxable
    > >salary is less, and they get to sell a bike they never paid for in the
    first
    > >place for a nominal sum?
    > >
    >
    > I'm not a tax expert but I do run a business and I think that the picture is a bit more
    > complicated than the interpretation given above.
    >
    > The company does much better than explained above because it probably doesn't pay VAT on the bike.
    > It gains as soon as you part with your £900 and again when you pay your £45. The transactions you
    > describe result in (approximate figures) a gain for you of about £255 and a gain for the company
    > of about £172 balanced by losses for the Inland Revenue of £300 and Customs & Excise of £127.
    > (This neglects NI and Corporation Tax).
    >

    Ah, but personally I work for a charity that isn't registered for VAT and so can't reclaim it, and
    pays no corporation tax.

    > I suspect that both the Inland Revenue and Customs & Excise will spot this trick and prevent the
    > employer writing off 95% of the bike's value in a single year or else find a way of taxing
    > someone (company or employee) for the benefit. As with company cars the sale to the employee
    > should take place at a market price. I don't think bikes worth having depreciate as quickly as
    > computers, do they?
    >

    It probably is true that one year is a bit soon to write a bike off, and if it is sold before it can
    be written off I suspect you are right and it would need to be at market value, but it could also
    depend on the initial value of the bike. Below a certain amount, it wouldn't even be capitalised in
    the accounts (although a £900 bike certainly would). Leaving the bike on permanent loan is of course
    an option..

    > As I've written before, the idea behind the 'official' scheme is that the company should lend the
    > bike free of charge and tax. If you fulfil the requirements of the scheme vis-à-vis commuting then
    > why not persuade them to operate the scheme properly or at least in such a way that employer and
    > employee share the costs more fairly?
    >

    Because the employer might not be able or willing to do it any other way, and sharing the cost in
    the way you suggest would mean the scheme would be of no effect, since no advantage could be taken
    of it in that situation.

    Rich
     
  14. In message <[email protected]>, Richard Goodman
    <[email protected]> writes
    >Because the employer might not be able or willing to do it any other way, and sharing the cost in
    >the way you suggest would mean the scheme would be of no effect, since no advantage could be taken
    >of it in that situation.

    Oh, I don't know. If you could use a £900 bike at the cost of a £5/week deduction from gross salary
    (£3.50 net) that might not be bad deal?
    --
    Michael MacClancy
     
  15. "Paul Saunders" <[email protected]> wrote in message
    news:[email protected]...
    > If a bike is used mainly for commuting to and from work you can get a tax concession on it. My
    > company limits it to £500, but my financial director (who is a keen cyclist) says that there is
    > no limit.

    I suspect the reason for the limit is the company's accountancy policies. Below a certain value,
    items appear in accounts simply as 'expenditure' incurred in the year the money is spent. Above a
    certain value assets have to be capitalised in the accounts meaning that they appear in the
    company's books in a different way, spread over a number of years as they depreciate in value. It
    makes for more troublesome accountancy and perhaps problems and yet more accountancy work in
    allowing title to pass to the employee at some point (or simply 'forgetting' about it). It might
    also be that since the idea of the scheme is to facilitate cycle commuting, which hardly requires
    anything all that exotic, a cheaper bike might be seen as more ostensibly suggesting it was acquired
    for the purposes of the scheme - and avoid any auditor scrutiny in that regard.

    Rich
     
  16. Yes you could spend £1200 on a bike and you'd still get the tax relief on
    it. It is supposed to be used mainly for commuting (but who's going to police that)? It's YOUR bike,
    You've paid for it so it doesn't have to be available to anyone else. Also, there's nothing
    'dodgy' about it. It's a government incentive (Yes, difficult to believe I know) to get people
    out of their cars. Our company pays for the bike and you then pay them back out of your gross
    salary so this part of your salary is immune to tax. I don't want to sound rude, but it really
    is as straight forward as that. (Well, it is in my companies case) "NIGEL" <[email protected]>
    wrote in message news:[email protected]...
    > Currently my company offers loans for employees to buy season tickets for public transport or
    > cars. My wish is to have them expand the scheme to include bicycles..as anyone out there have
    > experience of helping a company set up such a scheme or running a scheme. Looking at previous
    > posts it also looks like there is a tax allowance allowed for bicycle purchases this way, is
    > this right?
    >
    > The company is fairly cycle friendly with covered cycle racks and showers provided were possible
    > at all sites, so I can't see it being too much of a problem.
    >
    > Also we have a large base in London, would we be benefit from having corp membership of an org'
    > such as the LCN. We do have lots of other sites across the UK..so is there a more suitable org who
    > could provide benefits that the LCN provides for members
    >
    > Look forward to all your great advice
    >
    > Nigel
    >
    > PS the scheme wouldn't benefit me as I have just bought a lovely shiny new Condor Itali
    > today...only a week till I pick it up!!!!!
     
  17. Tony Raven

    Tony Raven Guest

    In news:[email protected], Michael MacClancy
    <[email protected]> typed:
    >
    > The company does much better than explained above because it probably doesn't pay VAT on the bike.
    > It gains as soon as you part with your £900 and again when you pay your £45. The transactions you
    > describe result in (approximate figures) a gain for you of about £255 and a gain for the company
    > of about £172 balanced by losses for the Inland Revenue of £300 and Customs & Excise of £127.
    > (This neglects NI and Corporation Tax).
    >

    The corporation tax is not insignificant. The bike comes within capital allowances for plant
    and machinery

    Tony

    --
    http://www.raven-family.com

    "All truth goes through three steps: First, it is ridiculed. Second, it is violently opposed.
    Finally, it is accepted as self-evident." Arthur Schopenhauer
     
  18. Tony Raven

    Tony Raven Guest

    In news:[email protected],
    >
    > It probably is true that one year is a bit soon to write a bike off, and if it is sold before it
    > can be written off I suspect you are right and it would need to be at market value, but it could
    > also depend on the initial value of the bike. Below a certain amount, it wouldn't even be
    > capitalised in the accounts (although a £900 bike certainly would). Leaving the bike on permanent
    > loan is of course an option..
    >

    Writing it down over a year doesn't help. The revenue is only interested in whether it was sold
    below market value. If it was they will class it as a benefit in kind and tax you on the difference
    between market value and what you paid. The written down value in the balance sheet is irrelevant.

    Tony

    --
    http://www.raven-family.com

    "All truth goes through three steps: First, it is ridiculed. Second, it is violently opposed.
    Finally, it is accepted as self-evident." Arthur Schopenhauer
     
  19. Tim Hall

    Tim Hall Guest

    On Thu, 1 May 2003 19:26:25 +0100, "Adrian Boliston" <[email protected]> wrote:

    >"Paul Saunders" <[email protected]> wrote in message
    >news:[email protected]...
    >
    >> If a bike is used mainly for commuting to and from work you can get a tax concession on it. My
    >> company limits it to £500, but my financial director (who is a keen cyclist) says that there is
    >> no limit. The company buys the bike and you then pay them back over a given period (3 months in
    >> our case) from your gross pay, thereby saving the tax.
    >
    >So you could potentially buy a £2k carbon fibre racer and only have £1200 taken out of your net
    >pay, with HM Govt footing the other £800?
    >
    >There *must* be a catch somewhere!!
    >

    You have to lend it to Gordon Brown every third weekend.

    Tim
    --

    fast and gripping, non pompous, glossy and credible.
     
  20. "Tony Raven" <[email protected]> wrote in message
    news:[email protected]...
    > In news:[email protected], Writing it down over a year doesn't help. The revenue
    > is only interested
    in
    > whether it was sold below market value. If it was they will class it as a benefit in kind and tax
    > you on the difference between market value and
    what
    > you paid. The written down value in the balance sheet is irrelevant.
    >

    Basically true, although it seems it is a bit more complicated than that. The provisions for
    calculating the taxable value of an assest transferred to an employee are contained, so far as I can
    see, in Chapter 10 of Part 3 of the same Act governing the exemption for cycles:
    http://www.hmso.gov.uk/acts/acts2003/30001--t.htm#206

    The cost of the benefit of a used/depreciated asset is the higher of the current market value and
    the initial market value less the costs and value of providing the asset as a benefit before the
    transfer... Which probably does comes down to the market value in the case of a bike, and as you say
    tax would be payable on the difference between the cost of the benefit and what you actually paid.

    However,
    - It seems some companies are operating these schemes without problem or hangup about it, so they
    seem to be finding a way of operating it to everyone's satisfaction.
    - Even the term 'market value' has some scope for flexibility - it's the price "expected" to fetch
    sold on the 'open market' - presumably an auction is an open market where "expectations" can be
    quite low.
    - As a matter of practical reality, items of office equipment and materials probably quite often end
    up in employee hands when no longer required by the company, with the company's consent, and noone
    is bothered about it. Such items have usually long since disappeared from the balance sheet or
    asset register, or never appeared on it in the first place, the value being too low. It saves
    aggravation and waste of time (money) dealing with something that is considered to be scrap. At
    least, that's certainly the case in my office. None of this gets shown on the accounts as a
    taxable benefit or otherwise. Unless a bike was particularly expensive, it mightn't take that long
    for it to disappear in the same way.

    Rich
     
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