How to persuade employer to get tax free bike



M

Mark

Guest
Hi,

I work for a small company and I would really like to get a tax free
bike. I can't afford to buy anything decent at full price and I
haven't managed to find a suitable secondhand bike. My current bike
is too small and old, so spares are a problem.

My employer is reluctant to provide tax free bikes due to fear of
extra admin work.

Does anyone have any ideas how I could convince them? (Already a
large proportion of employees cycle to work - so I can't use this
one).

TIA, Mark
 
N

Nick Kew

Guest
On Sat, 03 Nov 2007 13:42:59 +0000
Mark <[email protected]> wrote:

> Does anyone have any ideas how I could convince them? (Already a
> large proportion of employees cycle to work - so I can't use this
> one).


So get some of your cycling colleagues on-side. Then your
employer is doing something for the employees as a whole,
rather than taking on extra admin for just one of you.

--
not me guv
 
N

Nigel Cliffe

Guest
Mark wrote:
> Hi,
>
> I work for a small company and I would really like to get a tax free
> bike. I can't afford to buy anything decent at full price and I
> haven't managed to find a suitable secondhand bike. My current bike
> is too small and old, so spares are a problem.
>
> My employer is reluctant to provide tax free bikes due to fear of
> extra admin work.
>
> Does anyone have any ideas how I could convince them? (Already a
> large proportion of employees cycle to work - so I can't use this
> one).


Two strategies, and depends "how small" and "how flexible", and how many
employees would like the scheme as well (and thus join the asking).


a) Give them the info for the various outsourcing firms who do all the
paperwork for them, and don't charge the employer (they appear to take a cut
from the profit on the bike which is "sold" at full price). Appropriate for
moderately small employer, but may not be suited for tiny firms; companies
such as Halfords, CycleScheme, etc..


b) Have a sensible conversation about the "admin work" for a DIY solution.
There isn't much to administer. The biggest issue for DIY is the finance;
the bikes are bought up front, but chances are the employees only contribute
through salary sacrifice over a year or more. Very Bad from a cash-flow
point of view.


However... assuming you (and others) get bonus payments now and again, one
could ask to swap a bonus payment for a company bicycle instead of a bonus.
As the bonus would be cash out of the firm, the cash-flow issue for
purchasing bicycles disappears.

Financial approach:
i) Employee selects bicycle at local shop, and makes arrangement for company
to actually buy bicycle (by paying an invoice issued before delivery of
bike). Company claims back VAT.
ii) Company gives you access to company bicycle instead of bonus in pay
packet. Company saves employer NI contributions (12.8%).
iii) Employee saves employee NI contributions on bonus (11% or 1% depending
on your pay). Employee saves income tax (22% or 40%, depending on your
pay).
iv) Only decision to make on such an approach is to decide who pockets which
bits of the tax savings; should all of the savings go to you, or will the
firm only give you a proportion of the bicycle value ?

Apart from recording that the company owns a bicycle as a depreciating asset
on its books, there is no other admin; the revenue is specific about not
requiring records to be kept about the mileage/use of the cycle.
At this point, the company owns a bicycle which you can use. After some
years, you might decide to buy the used bicycle from the employer at its
x-year-old-trade-in value (perhaps 5-10% of its new price?), many salary
sacrifice schemes do this final step.



Example, £1000 bonus.

As cash - costs employer £1128.00 (with employer NI).
Employee (basic rate tax) sees approx 33% disappearing in NI and tax, so net
sees £666 in pocket. Alternatively, a 40% taxpayer sees approx 41% disappear
in NI+tax, so gets £590 in pocket.

As bicycle - employer buys bicycle costing £1325.40, and claims back the
VAT, net cost is £1128. Gives to employee.
Some years later you give firm a small payment for the residual value of an
old bicycle (so in time they make £50-£100!, though would need to write off
bicycle from assets and pay VAT on the s/hand price).

Its a lot of bicycle for a moderate take-home bonus sacrifice, plus a small
final payment !



My reading of the Government tax-free bike rules would be that your employer
must offer any cycle scheme equally to all employees, so the "bonus swap"
would need to be offered to all employees. The employer can add rules (such
as bikes only from certain shop, particular time when the offer is open,
particular values of bike, etc.). The employees can choose to not take the
"bonus swap" option. It neatly avoid all the cash-flow issues from salary
sacrifice, the need to involve a scheme company (Halfords, Cyclescheme,
etc), the £1000 consumer credit limits (there is no credit agreement!),
etc...



- Nigel (not a tax advisor or lawyer, so double check my suggestion for
legality).


--
Nigel Cliffe,
Webmaster at http://www.2mm.org.uk/
 
M

Mark

Guest
On Sat, 3 Nov 2007 15:59:14 -0000, "Nigel Cliffe" <[email protected]>
wrote:

Thank very much for your detailed answer :)

>Mark wrote:
>> Hi,
>>
>> I work for a small company and I would really like to get a tax free
>> bike. I can't afford to buy anything decent at full price and I
>> haven't managed to find a suitable secondhand bike. My current bike
>> is too small and old, so spares are a problem.
>>
>> My employer is reluctant to provide tax free bikes due to fear of
>> extra admin work.
>>
>> Does anyone have any ideas how I could convince them? (Already a
>> large proportion of employees cycle to work - so I can't use this
>> one).

>
>Two strategies, and depends "how small" and "how flexible", and how many
>employees would like the scheme as well (and thus join the asking).


The problem is, despite the high proportion of cyclists in the
company, I think I would be the only participant of this scheme. I
have spoken to all of them myself and they don't appear very
interested.

>a) Give them the info for the various outsourcing firms who do all the
>paperwork for them, and don't charge the employer (they appear to take a cut
>from the profit on the bike which is "sold" at full price). Appropriate for
>moderately small employer, but may not be suited for tiny firms; companies
>such as Halfords, CycleScheme, etc..


I have only heard of cyclescheme and halfords. The company I work for
only has about 15 employees - is that too small for these schemes?

>b) Have a sensible conversation about the "admin work" for a DIY solution.
>There isn't much to administer. The biggest issue for DIY is the finance;
>the bikes are bought up front, but chances are the employees only contribute
>through salary sacrifice over a year or more. Very Bad from a cash-flow
>point of view.


I think it's more the financial admin than the cash flow. It's not
much money from a business point of view. They may be more amenable
to solution a) despite the small size of the company.

>However... assuming you (and others) get bonus payments now and again, one
>could ask to swap a bonus payment for a company bicycle instead of a bonus.
>As the bonus would be cash out of the firm, the cash-flow issue for
>purchasing bicycles disappears.


ROTFL! My employer never pays any bonuses. They do a reasonable
pension scheme instead though.

[ -- snip financial info -- ]

Thanks. I understand the way the tax concessions work. It's very
similar to the salary sacrifice that my employer already does.

>My reading of the Government tax-free bike rules would be that your employer
>must offer any cycle scheme equally to all employees, so the "bonus swap"
>would need to be offered to all employees. The employer can add rules (such
>as bikes only from certain shop, particular time when the offer is open,
>particular values of bike, etc.). The employees can choose to not take the
>"bonus swap" option. It neatly avoid all the cash-flow issues from salary
>sacrifice, the need to involve a scheme company (Halfords, Cyclescheme,
>etc), the £1000 consumer credit limits (there is no credit agreement!),
>etc...


I'm not thinking about a £1000 bike ;-)

Cheers, Mark
 
T

Tony Raven

Guest
In article <[email protected]>,
[email protected] says...
>
> I have only heard of cyclescheme and halfords. The company I work for
> only has about 15 employees - is that too small for these schemes?


You are probably better off with Cyclescheme than Halfords - it makes
use of the network of local bike shops so rather than the Halfords
chain.

>
> I think it's more the financial admin than the cash flow. It's not
> much money from a business point of view. They may be more amenable
> to solution a) despite the small size of the company.
>


There are benefits for the company, not just the individual. They save
on their National Insurance contributions as well as being able to
reclaim the VAT on the bike. Against that they have little work to do
as it is all done by the scheme manager. It should be better than cost
neutral for a reasonable bike even if they marginally cost in staff time
to set it up and from then on they have something available should other
employees change their minds or new employees join.

--
Tony

" I would never die for my beliefs because I might be wrong."
Bertrand Russell
 
M

Mark

Guest
On Sun, 04 Nov 2007 03:20:02 -0800, [email protected] wrote:

>On Nov 3, 1:42?pm, Mark <[email protected]> wrote:
>> Hi,
>>
>> I work for a small company and I would really like to get a tax free
>> bike. I can't afford to buy anything decent at full price and I
>> haven't managed to find a suitable secondhand bike. My current bike
>> is too small and old, so spares are a problem.
>>
>> My employer is reluctant to provide tax free bikes due to fear of
>> extra admin work.
>>
>> Does anyone have any ideas how I could convince them? (Already a
>> large proportion of employees cycle to work - so I can't use this
>> one).
>>
>> TIA, Mark

>
>I/We have had the same problem with our company. I feel it is mainly
>because our managers wouldn't use the scheme so to them there is no
>value. It was the same when I asked about secure motorcycle parking.
>If it doesn't effect them then they see no point. It's rank bad, lazy
>management if you ask me.


I think you have hit the nail on the head there. The managers seem to
be a lot wealthier than I and don't seem to understand that others
have to count every penny.

M.
 
I

Ian Smith

Guest
On Sun, 04 Nov, Mark <[email protected]> wrote:
>
> I think it's more the financial admin than the cash flow.


snippety

> Thanks. I understand the way the tax concessions work. It's very
> similar to the salary sacrifice that my employer already does.


This I don't understand. We have the scheme at work, and there was
basically no extra admin compared to any other salary sacrifice
scheme. If there's already a salary sacrifice system in place, I
don';t understand what more admin there is, unless the company owns no
equipment (no tools, no computers, no furniture) at all and doesn't
have any accounting process for dealing with the value of stuff.

Even if they don't want to administer the scheme for themselves, most
of the ready-made options do it with next-to no admin to the company.

You could phone up one (or more) of the providers and talk to them as
if you're setting the scheme up for the company, gather all the
information and present it to 'management' as a "look, this is all you
need to do and then you'll have another benefit that simultaneously
improves staff moral, improves staff health, promotes staff retention
and saves the company money, all you need to do is put one line in the
annual accounts recording the depreciated asset of the bikes".

regards, Ian SMith
--
|\ /| no .sig
|o o|
|/ \|
 
R

raisethe

Guest
X-NO-ARCHIVE: On 4 Nov, 15:31, Ian Smith <[email protected]>
wrote:
> On Sun, 04 Nov, Mark <[email protected]> wrote:
>
> > I think it's more the financial admin than the cash flow.

>
> snippety
>
> > Thanks. I understand the way the tax concessions work. It's very
> > similar to the salary sacrifice that my employer already does.

>
> This I don't understand. We have the scheme at work, and there was
> basically no extra admin compared to any other salary sacrifice
> scheme. If there's already a salary sacrifice system in place, I
> don';t understand what more admin there is, unless the company owns no
> equipment (no tools, no computers, no furniture) at all and doesn't
> have any accounting process for dealing with the value of stuff.
>
> Even if they don't want to administer the scheme for themselves, most
> of the ready-made options do it with next-to no admin to the company.
>
> You could phone up one (or more) of the providers and talk to them as
> if you're setting the scheme up for the company, gather all the
> information and present it to 'management' as a "look, this is all you
> need to do and then you'll have another benefit that simultaneously
> improves staff moral, improves staff health, promotes staff retention
> and saves the company money, all you need to do is put one line in the
> annual accounts recording the depreciated asset of the bikes".
>
> regards, Ian SMith
> --
> |\ /| no .sig
> |o o|
> |/ \|


My personnel director nearly had a nervo trying (and failing) to set
up this scheme. I understand the main problems he had related to the
payroll software not being able to make the monthly deductions (more
likely the staff didn't know how to do it) and secondly HR not knowing
how to do a staff loan so trying to contract it out to a loan company!
It started getting crazy from there.

Sadly modern managers in large companies are not required to be
educated or intelligent, or endowed with common sense, but just able
to repeat vaguely appropriate buzz words in roughly the right order so
as to keep their immediate boss happy and their underlings in their
place.