Last year I got a £700 bike using a Cycle Scheme voucher, and expected it to end up costing me around £400. We know from the comments that hundreds of you have signed up to similar deals, riding away brand new bikes which you thought you were getting at up to a 50% discount.
Alas, Her Majesty's Revenue and Customs has decided to spoil the party by changing (or at least clarifying) the rules, which means the lovely £1,000 carbon road bike you signed up for might not be quite the bargain you anticipated. Doomsayers suggest this could be the end of the very popular scheme.
What HMRC has done is expanded its "fair market value" guidance for the worth of secondhand bicycles. This matters because although most people think the bikes they get on the Cycle to Work scheme are theirs to keep from the moment they wheel them from the shop, the small print says they are actually hiring them from their employers. At the end of the scheme (which usually lasts 12-18 months), employees are given the opportunity to buy back "their" bike for "the full market value". Many firms have been suggesting for years that the full market value would be 5% of the original price tag. On that basis I expected to owe the Guardian £35 in November, when my participation in the scheme ended.
Under the newly clarified rules, detailed here, I am going to have to pay quite a bit more. And so is anyone else partway through the scheme, as well as anyone who signs up in the future. That's because the killjoys in the tax office have decided that a bike worth more than £500 new will be worth 25% of its original value one year on. So my £700 bike will be worth £175 on its first birthday. Truth be told, it's probably a better reflection of its actual worth, but it's still a whopping £140 more than I was expecting.
