Bike For Work - Benefit, explain it please
- Thread starter agnes
- Start date
HMRC have gotten their knickers in a twist about this recently and as said are releasing guidance as the actual amount paid by the employee at the end should be market value, but have gotten away in the past with a nominal amount.
As in most things HMRC now don't like this and are saying "nominal" amounts mean it's essentially a taxable benefit in kind, just like any other assets given to employees for nominal amounts.
http://www.hmrc.gov.uk/manuals/eimanual/eim21667a.htm
The scheme is essentially an interest free loan over 12 months, minus a little bit, so it's good if you want a bike for a grand, but can't afford to buy it outright.
I think with my company you end up paying back around £950-960 for a £1000 loan, that is including the 25% fee at the end of the hire.
Stop being a total drama queen.
IF your employers pension contributions are based on your NET salary, you will see a reduction in their pension contributions to the tune of ~£4 a month, based on the average UK salary based on ~8%.
Caporegime
Thats not right, the money you would save from the salary sacrifice should make it a lot cheaper than 40 to 50 quid!
Caporegime
Employee simply puts the tax savings back into their pension then.
Associate
- Joined
- 15 Mar 2010
- Posts
- 449
nope - these figures are wrong, i'm afraid
Associate
How to get a cheap bike using an interest free loan.
1. Apply for 12 month 0% credit card
2. Go to local bike shop and haggle down the price by at least £100 (also throw in a free helmet and lights)
3. Pay off the card equally every month
4. ???????
5. PROFIT!
1. Apply for 12 month 0% credit card
2. Go to local bike shop and haggle down the price by at least £100 (also throw in a free helmet and lights)
3. Pay off the card equally every month
4. ???????
5. PROFIT!
Or use the cycle to work scheme and save more than that?
Caporegime
not a guaranteed discount, not guaranteed to get free accessories.... not that much of a saving.
Caporegime
Credit cards give relief from income tax? Didn't know that, thanks!
Associate
Sod ya then you smug gits! I was just giving another less complicated idea 
Ride a goat to work. /thread
Ride a goat to work. /thread
I think everyone is missing the point here.
WITHOUT -
You have say a salary of £27,000, you wish to buy a £1000 bike. Now, let's say your on 40% tax, this takes £10,800 away, leaving you with £16,200 each year. (Forgetting about NI for the moment).
So, you now spend £1000 on a bicycle, leaving you with £15,200 a year.
WITH -
Again, you have a salary of £27,000, you take away £1000 BEFORE the tax man rapes this, leaving you with £26,000. After the tax man cleans up, you are then left with £15,600.
So, in summary, the person above saved £200 on tax a year simply by applying for a benefit.
Now if you take into account the 'loan' side of it.
WITHOUT -
You loan £1000 for 12 months, with typical APR of 20% (example), you then pay back a total of £1200. Plus, I doubt many average joe's have £1000 laying around to burn on a bicycle.
WITH -
You take £1000 in vouchers, no APR, so in total you pay back £1000...
Understand? So you do save money, sure, it's not a lot, but you do save.
ags
WITHOUT -
You have say a salary of £27,000, you wish to buy a £1000 bike. Now, let's say your on 40% tax, this takes £10,800 away, leaving you with £16,200 each year. (Forgetting about NI for the moment).
So, you now spend £1000 on a bicycle, leaving you with £15,200 a year.
WITH -
Again, you have a salary of £27,000, you take away £1000 BEFORE the tax man rapes this, leaving you with £26,000. After the tax man cleans up, you are then left with £15,600.
So, in summary, the person above saved £200 on tax a year simply by applying for a benefit.
Now if you take into account the 'loan' side of it.
WITHOUT -
You loan £1000 for 12 months, with typical APR of 20% (example), you then pay back a total of £1200. Plus, I doubt many average joe's have £1000 laying around to burn on a bicycle.
WITH -
You take £1000 in vouchers, no APR, so in total you pay back £1000...
Understand? So you do save money, sure, it's not a lot, but you do save.
ags
Soldato
Bike+ anything is fine if it goes over your voucher amount cash on top os fine too.
Only downside is you've got to go to halfords.
Only downside is you've got to go to halfords.
No you don't. I got mine from a branch of Evans Cycles.
People who earn £27k don't pay 40% tax
Know that, was using it as an example.
Even at 20%, you save money... That was the point I was getting at.
ags
Soldato
Nope, Evans are ride2work.
What are you on about?
It's the exact same scheme as is being discussed in this thread.
Edit: Ahh, I've got you now, it would appear that there are a few different 'versions' of this same scheme, with the vouchers available for different retailers.
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