Income Tax Pay £200 is a bummer of a square, especially as you'd been counting on the £200 for passing Go. For our purposes, this square will represent the Cycle to Work Scheme, precisely because it enables you to avoid this sort of thing.
The scheme works through some sort of accounting sleight-of-hand where your employer (if it's in the scheme) buys the bike on your behalf, and you buy it over the course of a year through monthly contributions deducted from your salary. If you're a basic-rate taxpayer and buy a bike costing £500 through the scheme, you'd get your bike for just £300, thus effectively avoiding £200 tax.
Other ways to avoid tax might include setting yourself up as a bike-based religion with charitable status, but that could be tricky.
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1. If you are writing a book with a bike and photos, bike + camera may be deductible -but you do need self-employment income to
ReplyDelete2. You can deduct business miles done on a bike (other than the commute) from your tax return, even if your employer doesn't explicitly give you money for cycling. This is good as it stops you having to buy a bike from halfords, and rewards you for actually doing work on the bike.
Runner's don't get any money back for running to see customers, very unfair.
#2 is
Cyclescheme is only one such operator. They aren't 'the scheme' as such.
ReplyDeleteThere is a whole list of them here down the right hand side under 'third party operators'. http://www.lcc.org.uk/index.asp?PageID=310
Apparently they charge 10% of the bike price from the bike shop, so the bike shop has to sell it cheaper, to be able to sell the bike via the scheme. This is what I understand anyway. Using the rebate scheme, you don't need one of these operators, they just help with the paperwork.
The official govt website is http://www.dft.gov.uk/pgr/sustainable/cycling/cycletoworkschemeimplementat5732
ReplyDeleteCycleScheme is just an implementer/facilitator i.e. someone wanting to take a cut of the NI and Tax savings in return for running the scheme for your employer. Your company can do all the work themselves and if they do any other salary sacrifice it should be quite straight forward.
Also it is not correct that "you buy it over the course of a year". The salary sacrifice payments are for having the use of the bike (a lease agreement). At the end of the scheme the bike remains the employers! It is normal to then offer it for sale to the employee. It is normal for this to be a fairly nominal amount, BUT this cannot be put into the agreement (it invalidates the tax avoidance).
This is very important as AFAICT the value for money of the scheme relies on this resale part and so you have to trust your company to a certain extent.
But what happens if the bike is stolen? I understand that either the employer or the employee should insure the bike, but I've heard ofinstances where this seems not to have happened. Bike thieves seem to love new bikes in particular. Theft leaves soome bikers paying monthly installments on bikes that they can no longer ride. New bikes are for other people. Old bikes are for the likes of me.
ReplyDelete@all: Thanks for the comments... am currently on tax-deductible research biking trip (expenses of which, ferries, accomm, beer etc, wholly and necessarily incurred for self-employed work purposes) in scenic, distant, ie internet-marginal, location, so can't reply in detail, but ta for the info.
ReplyDeleteAs to theft of CtoW bike, presumably it's the employer's problem, as they own the bike?
I agree with you Rob that a stolen bike should be the employer's problem, however over at Cyclescheme.co.uk they advise in their FAQs that "If the bike gets stolen you will be liable for any outstanding monies without any tax exemptions, so it's very important to make sure the bike is insured." Other businesses offering this scheme say much the same and say that the rider has to insure the bike, which at first sight seems ridiculous if the bike actually belongs to the employer. Mind you the bike may actually belong to a finance company, and by the looks of it you still have to insure it or else risk being without a bike and have to carry on making the payments.
ReplyDeleteJon, Kingston