tax perk

Thanks for that. Out of interest......

Has anyone used this facility and any pointers good or bad?

Thanks once again

JB
"Ian Smith" <[email hidden]> wrote in message
news:[email hidden]...

Quoted message said:

"JB" <[email hidden]> wrote in message
news:[email hidden]...

Quoted message said:

Can anyone point me to where i can get info about buying a bike and
getting tax relief etc on it. The bursar at work has said he is happy to
support staff in doing this, but is not prepard to find any info on it. I
found an old (I think it was IR 176 doc) but it said it had been
superceded. I have so far drawn blanks as to the official info to give to
him.

JB

Try here: http://www.booost.uk.com/

Ian

in message <[email hidden]>, JB ([email hidden]'😉

Quoted message said:

Thanks for that. Out of interest......

Has anyone used this facility and any pointers good or bad?

As I've said before I've used it from the employer's end (to reward an
employee who was also a cyclist). I didn't deal with the detail, my
accountant did that, but as I understand it it was entirely
straightforward. It's an extremely tax-efficient way to reward a
cyclist, and the better (or, more precisely, more expensive) the bike
the more tax-efficient it is. You cannot give the same employee more
than one bike this way, at least not in a short period, so it makes
sense to use this scheme to get the most expensive bike in your
collection, whether or not it's the one you use routinely for
commuting.

In our case the bike cost £2,400. We reclaimed the VAT. The employee did
not have to pay any tax or NI on the value of the bike, and nor did we
have to pay employers NI. So it cost the business just under £2000. If
we'd given the employee the money as a bonus, we'd have had to pay
employers NI of about £220 so we'd have given her £1780 on which she'd
have had to pay income tax and NI of £445 and £196 respectively,
leaving her with £1139 to buy the bike, or less than half as much. Like
I say, extremely tax efficient.

--
[email hidden] (Simon Brooke) http://www.jasmine.org.uk/~simon/

Morning had broken, and there was nothing we could do but wait
patiently for the RAC to arrive.

JB said:

Can anyone point me to where i can get info about buying a bike and getting
tax relief etc on it. The bursar at work has said he is happy to support
staff in doing this, but is not prepard to find any info on it. I found an
old (I think it was IR 176 doc) but it said it had been superceded. I have
so far drawn blanks as to the official info to give to him.

JB

See also http://www.taxfreebikes.co.uk/ which oes under the name of
CycleScheme. Avon Valley in BAth are involved so there is a better
range of bike sthan Boost or Halfords offer.

Peter

--

www.amey.org.uk

in message <[email hidden]>, Peter Amey

(') said:

JB said:

Can anyone point me to where i can get info about buying a bike and
getting tax relief etc on it. The bursar at work has said he is happy
to support staff in doing this, but is not prepard to find any info
on it. I found an old (I think it was IR 176 doc) but it said it had
been superceded. I have so far drawn blanks as to the official info
to give to him.

See also http://www.taxfreebikes.co.uk/ which oes under the name of
CycleScheme. Avon Valley in BAth are involved so there is a better
range of bike sthan Boost or Halfords offer.

You can get the bike from anywhere and there is no special paperwork
involved. Simply, the company buys the bike, the company gives the bike
to the employee to use, after a short period of years the company sells
the bike to the employee for a small amount. That's all. You do not
need to fill in any special forms or do anything complex, and there is
no reason to prefer one cycle shop over another except that the shop
you buy from should be VAT registered and provide a proper VAT invoice.

taxfreebikes.co.uk and their like are essentially scam artists trying to
skim some off the scheme.

--
[email hidden] (Simon Brooke) http://www.jasmine.org.uk/~simon/

;; Madness takes its toll. Please have exact change.

Simon Brooke said:

in message <[email hidden]>, Peter Amey

(') said:

JB wrote:

[snip]

Quoted message said:

taxfreebikes.co.uk and their like are essentially scam artists trying to
skim some off the scheme.

I think "scam artists" is a bit heavy. When I spoke to Richard Grigsby
at AVC about this it was clear that the motivation is to make it /easy/
for employers to take up the benefits of the Inland Revenue scheme.

You are quite right that there is nothing especially complex that /has/
to be done for an employer to offer bikes in this way; however, there is
some effort involved in setting up the salary sacrifice, recording the
bikes as depreciating assets etc. Experience shows that it is much
easier to get such things adopted if they come pre-packaged. As someone
actively trying to set this up in my company (along with the similar
computer and child care voucher schemes) I welcome others' efforts to
make it easy for me.

The benefit to Cyclescheme comes from them selling more bikes (which I
assume we are broadly in favour of) not from "skimming" anything off the
scheme.

Peter

--

www.amey.org.uk

In message <[email hidden]>, JB <[email hidden]>
writes

Quoted message said:

Has anyone used this facility and any pointers good or bad?

If you're referring to the booost site, I sent the details to the human
resources department at work, and it got a brief mention at the last
staff meeting, but I'm still waiting for an official announcement on
whether or not it's going to be implemented.

--
congokid
Good restaurants in London? Number one on Google
http://congokid.com

in message <[email hidden]>, Peter Amey

(') said:

Simon Brooke said:

in message <[email hidden]>, Peter Amey

(') said:

JB wrote:

[snip]

Quoted message said:

taxfreebikes.co.uk and their like are essentially scam artists trying
to skim some off the scheme.

I think "scam artists" is a bit heavy. When I spoke to Richard
Grigsby at AVC about this it was clear that the motivation is to make
it /easy/ for employers to take up the benefits of the Inland Revenue
scheme.

[snip for brevity]

Quoted message said:

The benefit to Cyclescheme comes from them selling more bikes (which I
assume we are broadly in favour of) not from "skimming" anything off
the scheme.

H'mmm. I'm prepared to bet you could get the same bikes at lower price
elsewhere. However, I appreciate the merit in what you say - perhaps
'scam' was putting it a bit strongly.

--
[email hidden] (Simon Brooke) http://www.jasmine.org.uk/~simon/

Morning had broken. I found a rather battered tube of Araldite
resin in the bottom of the toolbag.

Quoted message said:

Quoted message said:

but as I understand it it was entirely straightforward.

Mmmm.

I'm trying to get my employer to do this, and seem to be hitting
obstacles at every turn! They are keen(ish) but there's so little
information about the scheme (2 lines on the IR website, a few articles
in papers). For example - reclaiming the VAT - the scheme started last
May, but the most up to date manual from customs and excise was
published in March. So that involves a 10-20 day turnaround to get it
confirmed that you can reclaim VAT (you wouldn't normally be able to on
something used by an employee not for the business).

Then there's the salary sacrifice - sounds simple, but what about
pension contributions based on % of salary? I get 10%, so losing 10% of
the net price of the bike will be a fair whack. And PHI, health
insurance, life insurance are all based on salary.

Also to get a salary sacrifice, you need to get a lawyer to draw up a
contract to alter the employment contract.

It's a fantastic idea - but why do the government make the rules so
complicated (and then not publish them)? It makes you think they don't
actually want anyone to use the scheme!

iakobski' of urlhttp://groups.google.com/url said:

Quoted message said:

Quoted message said:

but as I understand it it was entirely straightforward.

Mmmm.

I'm trying to get my employer to do this, and seem to be hitting
obstacles at every turn! They are keen(ish) but there's so little
information about the scheme (2 lines on the IR website,

There's an entire page at:
http://www.inlandrevenue.gov.uk/news/comps-and-bikes.htm
I expect if you ask there is a leaflet that includes it.

Quoted message said:

Then there's the salary sacrifice - sounds simple, but what about
pension contributions based on % of salary? I get 10%, so losing 10% of
the net price of the bike will be a fair whack. And PHI, health
insurance, life insurance are all based on salary.

That's up to your employer; all those other things can be based on the
salary before sacrifice, if the employer wants to.

Quoted message said:

Also to get a salary sacrifice, you need to get a lawyer to draw up a
contract to alter the employment contract.

Not true. I do a salary sacrifice (for something else) every year with a
simple letter to my employer.

--
The Vulcan Neck Pinch is not half as powerful as the Vulcan
Groin Kick, but it is more politically correct.
Steph Peters delete invalid from [email hidden]
Tatting, lace & stitching page <http://www.sandbenders.demon.co.uk/index.htm>

Quoted message said:

Quoted message said:

There's an entire page at:

Thanks, that's really useful. I searched and searched on the IR
website, and it didn't come up with that - obviously using the wrong
search string :-(

Quoted message said:

Quoted message said:

That's up to your employer; all those other things can be based on

the salary before sacrifice, if the employer wants to.

I think you're *probably* right - but even the accountancy profession
is not clear. This is what an article on AccountingWeb
(http://www.accountingweb.co.uk/cgi-bin/item.cgi?id=136848&d=448&h=0&f=0)
had to say about a week ago:

----
A further concern is whether under a salary sacrifice scheme the
employee's salary is treated as being net (excluding the value of the
vouchers) or gross (including the value of the vouchers) for the
purpose of employment conditions. This has implications for calculating
pay awards and bonuses, pension and redundancy awards and possibly
starting pay on promotion. The government is currently consulting over
this issue and will provide guidance.
----

Personally, I think there is prior guidance that says you can treat the
sacrifice as part of salary, then apply tax and NICs at 0%, but I am
not an accountant. My employer's business is writing payroll software,
so if it's a problem for them, it's a nightmare for anyone else! I was
told by my LBS that the local council were pursuing this for their
employees, but found there were too many difficulties implementing the
payroll deductions and cancelled the scheme.

Quoted message said:

Quoted message said:

I do a salary sacrifice (for something else) every year with a

simple letter to my employer.

That is a risk your employer is taking. If you were to claim later that
you didn't realise the implications, for example if the reduction in
NICs affected your state pension or benefits, then the employer would
have to make up the shortfall. Some employers might be happy to take
that risk.

iakobski' of urlhttp://groups.google.com/url said:

Quoted message said:

Quoted message said:

There's an entire page at:

Thanks, that's really useful. I searched and searched on the IR
website, and it didn't come up with that - obviously using the wrong
search string :-(

I used bicycle.

Quoted message said:

Quoted message said:

Quoted message said:

That's up to your employer; all those other things can be based on

the salary before sacrifice, if the employer wants to.

I think you're *probably* right - but even the accountancy profession
is not clear. This is what an article on AccountingWeb
(http://www.accountingweb.co.uk/cgi-bin/item.cgi?id=136848&d=448&h=0&f=0)
had to say about a week ago:

I am a chartered accountant, although not currently working as one. An
employee and employer can agree what they want about rates of reward.
However I do agree that there are implications for calculations of salary
related items regulated by law, like redundancy pay and NI contribution
based benefits. So far as redundancy pay is concerned, the cut off point is
so low now that for a full time employee a sacrifice is unlikely to make any
difference to the potential amount. The one drawback that I think is
serious and real, is for any employee who wants to apply for a mortgage and
is up against the lending limits. There might be lenders out there who are
prepared to take sacrifices into account, but in general I reckon they would
not.

Quoted message said:

Personally, I think there is prior guidance that says you can treat the
sacrifice as part of salary, then apply tax and NICs at 0%, but I am
not an accountant. My employer's business is writing payroll software,
so if it's a problem for them, it's a nightmare for anyone else!

As I now write software for a living, I've often thought I ought to be
working for a company in that sort of business.
--
Holidays are an expensive trial of strength.
The only satisfaction comes from survival. - Jonathan Miller
Steph Peters delete invalid from [email hidden]
Tatting, lace & stitching page <http://www.sandbenders.demon.co.uk/index.htm>

Steph Peters said:

I am a chartered accountant, although not currently working as one. An
employee and employer can agree what they want about rates of reward.
However I do agree that there are implications for calculations of salary
related items regulated by law, like redundancy pay and NI contribution
based benefits. So far as redundancy pay is concerned, the cut off point is
so low now that for a full time employee a sacrifice is unlikely to make any
difference to the potential amount. The one drawback that I think is
serious and real, is for any employee who wants to apply for a mortgage and
is up against the lending limits. There might be lenders out there who are
prepared to take sacrifices into account, but in general I reckon they would
not.

So the only question that I have left on this matter is... how do you
determine the market value of the bike after a given period of time. Is
there a table of depreciation values for various manufacturers / models
/ genres of cycling, or do you pick a figure and hope that the IR don't
query it?

A colleague and I are working on getting our employer to adopt this one.
He wants a new bike, I'm more interested in seeing if I can claim tax
back on cycled mileage... more as a matter of principle than as a
money-earner.

Jon

Jon Senior said:

So the only question that I have left on this matter is... how do you
determine the market value of the bike after a given period of time. Is
there a table of depreciation values for various manufacturers / models
/ genres of cycling, or do you pick a figure and hope that the IR don't
query it?

Personally I think that's the catch of the scheme. You pay for the bike
from pre-tax pay but then you should pay the market value of the bike
(or income tax on the market value) at the end in order to own it. If
you take a Brompton for example it would cost you say ~50% (higher rate
tax and NIC) of ~£500 or £250 in taxed pay through the scheme but then
after three years its still worth about ~£350. If you buy it the whole
thing has cost you £600 or if you get given it and pay the benefit in
kind tax thats another £175 making it £425. I know a Brompton is an
extreme in low depreciation but it illustrates that its not the initial
bargain it seems.

Now you could have an employer who just gives it to you and ignores the
benefit in kind and the chances of the IR picking it up are minimal but
most employers will play tax accounting by the book and put it on your P11D.

Quoted message said:

A colleague and I are working on getting our employer to adopt this one.
He wants a new bike, I'm more interested in seeing if I can claim tax
back on cycled mileage... more as a matter of principle than as a
money-earner.

The latter is easy. The IR allow 20p a mile for a bicycle for
non-commuting business mileage. Work out your Aprroved Mileage Rate of
20p times the number of miles travelled on business, subtract what your
employer pays you for those journeys and you can claim the balance back
from the Inland Revenue. The only problem is you do need to do an
annual tax return to submit the claim.

Tony

iakobski> obviously using the wrong search string :-(

Steph Peters> I used bicycle.

I just noticed that page was published on Feb 20th - a few days after
my fruitless search!

Thanks for your input, my employer is still shilly-shallying, but at
least they've agreed in principle. I've suggested they take the
sacrifice from my bonus, which they think is a good idea, but they
still want the legals to draw up the agreement documentation.

Jon Senior said:

So the only question that I have left on this matter is... how do you
determine the market value of the bike after a given period of time.

There are some standard accounting rules for companies: you write off
the capital cost of equipment over the years after acquiring it.
IIRC it's about 25% a year. Meaning the company can treat it as having
zero residual value after 4 years. At least, that's my recollection
of things, as explained by my financial controller.

Anyway, where there's a company, there's an accountant lurking
somewhere. Ask them.

--
Nick Kew

Nick Kew said:

Jon Senior said:

So the only question that I have left on this matter is... how do you
determine the market value of the bike after a given period of time.

There are some standard accounting rules for companies: you write off
the capital cost of equipment over the years after acquiring it.
IIRC it's about 25% a year. Meaning the company can treat it as having
zero residual value after 4 years. At least, that's my recollection
of things, as explained by my financial controller.

Anyway, where there's a company, there's an accountant lurking
somewhere. Ask them.

You are confusing asset value on the balance sheet with market value for
taxable benefit purposes. A company can write off the value over 12
months if it wants to so the asset value is then zero. That doesn't
mean they can then give it to you for free because it still has market
value which they are transferring to you and is income taxable and NICable.

Tony

in message <[email hidden]>, Tony Raven

(') said:

Nick Kew said:

Jon Senior said:

So the only question that I have left on this matter is... how do you
determine the market value of the bike after a given period of time.

There are some standard accounting rules for companies: you write off
the capital cost of equipment over the years after acquiring it.
IIRC it's about 25% a year. Meaning the company can treat it as
having
zero residual value after 4 years. At least, that's my recollection
of things, as explained by my financial controller.

Anyway, where there's a company, there's an accountant lurking
somewhere. Ask them.

You are confusing asset value on the balance sheet with market value
for
taxable benefit purposes. A company can write off the value over 12
months if it wants to so the asset value is then zero. That doesn't
mean they can then give it to you for free because it still has market
value which they are transferring to you and is income taxable and
NICable.

I don't believe this (and neither does my accountant). A free bargain
between a willing seller and a willing buyer defines market value. If
the company has, using legitimate accounting practices, written
something down to pence on its books and sells it to you for pence,
then no-one can come along ex post facto and say it wasn't worth pence.
The marketplace decided it was. It's not as if the company sold a new
bike to you for pence - that would be dodgy. But after three years the
residual value is what you and the company freely agree it is.

--
[email hidden] (Simon Brooke) http://www.jasmine.org.uk/~simon/

Simon Brooke said:

I don't believe this (and neither does my accountant). A free bargain
between a willing seller and a willing buyer defines market value. If
the company has, using legitimate accounting practices, written
something down to pence on its books and sells it to you for pence,
then no-one can come along ex post facto and say it wasn't worth pence.
The marketplace decided it was. It's not as if the company sold a new
bike to you for pence - that would be dodgy. But after three years the
residual value is what you and the company freely agree it is.

I beg to differ. The market place had not decided - it was a cosy deal
between you and your employer, not an arms length transaction between
third parties. If it was £100k of gold bars that the company had written
down to pence in a year and sold you for pence, do you think you would
get away with it? Every company would be paying their staff in written
down gold bars rather than cash if you were right. Same applies to
company cars, ditto bicycles.

I should get yourself a new accountant if he doesn't understand basics
like this.

Tony

Simon Brooke said:

in message <[email hidden]>, Tony Raven

(') said:

You are confusing asset value on the balance sheet with market value
for
taxable benefit purposes. A company can write off the value over 12
months if it wants to so the asset value is then zero. That doesn't
mean they can then give it to you for free because it still has market
value which they are transferring to you and is income taxable and
NICable.

I don't believe this (and neither does my accountant). A free bargain
between a willing seller and a willing buyer defines market value. If
the company has, using legitimate accounting practices, written
something down to pence on its books and sells it to you for pence,
then no-one can come along ex post facto and say it wasn't worth pence.
The marketplace decided it was. It's not as if the company sold a new
bike to you for pence - that would be dodgy. But after three years the
residual value is what you and the company freely agree it is.

That's not a marketplace, that is a conspiracy between 2 people to sell
something for well below its true value.

My (old) employer used to sell old stuff to employees occasionally
(office furniture, machinery, perhaps an old car or two). When it did
so, it was through an auction system where anyone could bid. It would
certainly not have been acceptable to simply give an item to a preferred
employee.

James