CycleScheme

Hi guys,

Anyone here got any experience of using EIM21664 - Particular benefits: exemption for bicycles?

I know CycleScheme can do all sorts of admin for you but, as I see it, their only way of operating is for the employee to hire the bike from the employer on a 12 / 18 month contract.

It strikes me (certainly in the cast of some employers that I know who aren't very flush with cash) that, given that there are loads of bike retailers selling bikes on 9 months 0% finance, it might be quite attractive to some employers to just buy the bike themselves and have the employee make a salary sacrifice equal to the monthly payments; this being their 'rent'.

Is there any reason why employers can't do this?
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Comments

  • PGM
    PGM Registered Posts: 1,954
    I don't see why they can't do that. Although the cycle to work scheme isn't as good as it once was, was it the vat that they stopped you being able to recover?

    In the end we decided to negotiate a small discount with a local bike shop, which was similar to the cycle to work scheme discount (apart from not being able to pay monthly).
  • jamesm96
    jamesm96 Registered Posts: 523
    PGM wrote: »
    I don't see why they can't do that. Although the cycle to work scheme isn't as good as it once was, was it the vat that they stopped you being able to recover?

    Yeah that's right. Originally the employer could recover the VAT and the rental payments to the employee were not VATable; HMRC clarified that after a Euro-court ruling and have now stated that, even if the employee pays by salary sacrifice, the employer needs to account for output VAT on the amount of the sacrifice (i.e. the employee's rental payment).
    PGM wrote: »
    In the end we decided to negotiate a small discount with a local bike shop, which was similar to the cycle to work scheme discount (apart from not being able to pay monthly).

    But, even in the CycleScheme, doesn't the employer have to foot the total bill for he bike up-front anyway?
  • PGM
    PGM Registered Posts: 1,954
    jamesm96 wrote: »
    But, even in the CycleScheme, doesn't the employer have to foot the total bill for he bike up-front anyway?

    Sorry I didn't explain myself there. With the discount we negotiated we told staff just to go and sort themselves out, it wasn't bought through the company.

    The worry was with staff leaving, and also it was obvious the scheme rules weren't being followed, ie people 30+ miles away wanting to buy bikes, there was no way they'd be cycling to work.
  • jamesm96
    jamesm96 Registered Posts: 523
    PGM wrote: »
    Sorry I didn't explain myself there. With the discount we negotiated we told staff just to go and sort themselves out, it wasn't bought through the company.

    The worry was with staff leaving, and also it was obvious the scheme rules weren't being followed, ie people 30+ miles away wanting to buy bikes, there was no way they'd be cycling to work.

    Ah I see, thanks.

    I'm looking to buy one myself, although I also have a client who's wanting to buy a £1,700 road bike. The CycleScheme only allow up to £1k which is a bit prohibitive, but as far as I can see if his company just buys it (he's sole director and shareholder) and he rents it back, I don't see that he'd need a Consumer Credit licence (which is afforded by the CycleScheme) as it's a loan to an employee, and I can't see that the rules prohibit the cost either; price isn't mentioned in the HMRC guidance.
  • janwal
    janwal Registered Posts: 1,189
    We run Cyclescheme at the hospital I work for. You are allowed to purchase a bike upto the value of £1000. Then we pay Cyclescheme the money and they send vouchers to that value. The member of staff uses these to purchase the bike and a deduction is made out of the salary each month to the value of 95% of the original price.
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 ? ? ?
    jamesm96 wrote: »
    Hi guys,

    Anyone here got any experience of using EIM21664 - Particular benefits: exemption for bicycles?

    I know CycleScheme can do all sorts of admin for you but, as I see it, their only way of operating is for the employee to hire the bike from the employer on a 12 / 18 month contract.

    It strikes me (certainly in the cast of some employers that I know who aren't very flush with cash) that, given that there are loads of bike retailers selling bikes on 9 months 0% finance, it might be quite attractive to some employers to just buy the bike themselves and have the employee make a salary sacrifice equal to the monthly payments; this being their 'rent'.

    Is there any reason why employers can't do this?

    I did a lot of reading up on C2W last year before I bought my bike.

    There is nothing stopping you doing your own scheme, as long as it's compliant with the rules. I was lucky and got mine in before the VAT rule changed.

    I cycled into work today :D
  • PGM
    PGM Registered Posts: 1,954
    Monsoon wrote: »
    I cycled into work today :D

    How far do you cycle?

    I sometimes walk the 3.5 miles along the canal to work. Its the kafuffle of getting changed into cycling gear that puts me off..
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 ? ? ?
    I cycled in flipflops and a knee length skirt today :D

    It's 5-6 miles depending on which route I take, which sometimes is down the canal. I took the road today.

    I need to cycle back at lunch to walk the dogs (and then will drive back in after) - not looking forward to doing it in this heat though - oh well! :D
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 ? ? ?
    My beauty :)

    206312_192076650835309_6585296_n.jpg
  • PGM
    PGM Registered Posts: 1,954
    Monsoon wrote: »
    I cycled in flipflops and a knee length skirt today :D

    It's 5-6 miles depending on which route I take, which sometimes is down the canal. I took the road today.

    I need to cycle back at lunch to walk the dogs (and then will drive back in after) - not looking forward to doing it in this heat though - oh well! :D

    Thats quite a few miles in one day, good going! :)

    Another thing that would tempt me to cycle more is some good shower facilities at work, a bit warm for me!
  • Louise89
    Louise89 MAAT Posts: 296
    Originally Posted by Monsoon
    I cycled in flipflops and a knee length skirt today

    It's 5-6 miles depending on which route I take, which sometimes is down the canal. I took the road today.

    I need to cycle back at lunch to walk the dogs (and then will drive back in after) - not looking forward to doing it in this heat though - oh well!
    PGM wrote: »
    Thats quite a few miles in one day, good going! :)

    Another thing that would tempt me to cycle more is some good shower facilities at work, a bit warm for me!


    I instantly read that as PGM cycled in flipflops and a knee length skirt!!! Haha
  • PGM
    PGM Registered Posts: 1,954
    Louise89 wrote: »

    I instantly read that as PGM cycled in flipflops and a knee length skirt!!! Haha

    haha Although lycra isn't much of an improvement! :D
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 ? ? ?
    PGM wrote: »
    haha Although lycra isn't much of an improvement! :D
    Lycra is for the 80's. :lol:
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 ? ? ?
    Louise89 wrote: »
    I instantly read that as PGM cycled in flipflops and a knee length skirt!!! Haha

    Hee hee hee :lol:

    Ah, and I survived. It was VERY hot though, had to jump in the shower (cold) when I got back.
  • PGM
    PGM Registered Posts: 1,954
    Monsoon wrote: »
    Lycra is
    Monsoon wrote: »
    VERY hot though, had to jump in the shower (cold)

    Can we keep on track please :D

    How worthwhile is the cycle scheme?
  • jamesm96
    jamesm96 Registered Posts: 523
    PGM wrote: »
    Can we keep on track please :D

    Punn intended?
    PGM wrote: »
    How worthwhile is the cycle scheme?

    I'm about to order an £800 bike which, after the tax and NI reduction, will only actually cost me £544. And my employer gets £110 of Employer's NI back too.

    Plus I can lose some of the baby weight I've put on since we had kids!

    :001_tt2:
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 ? ? ?
    Haha, PGM :)
    PGM wrote: »

    How worthwhile is the cycle scheme?

    My bike was about £350. After VAT and CT relief it's cost me £233. Bargain.

    For me, it was just a cheap way of getting a new bike. I took a flyer that my staff wouldn't want to join in - but of course if they did want to, I'd have bought another company bike and done it properly. I'm more than happy to provide health and fitness benefits to my staff. Healthy = happier and more productive.

    I cycled in again today but I neeeed a rest day. I was wrecked trying to get up the hill out of my village. Had to stop 5 times :lol: Will be cycling home by the canal, I've had it with hills!!
  • PGM
    PGM Registered Posts: 1,954
    jamesm96 wrote: »
    I'm about to order an £800 bike which, after the tax and NI reduction, will only actually cost me £544. And my employer gets £110 of Employer's NI back too.

    Plus I can lose some of the baby weight I've put on since we had kids!

    :001_tt2:

    So still a hefty discount without the vat saving, not bad!

    Bike shops must be doing well with sales, with all the tour de france sucess and fingers crossed the olympics.
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 ? ? ?
    Monsoon wrote: »
    Healthy = happier and more productive.

    I take it back.

    I'm exhausted today. I've done 33 miles this week in 4 days, and I have no energy this morning. :lol:
  • PGM
    PGM Registered Posts: 1,954
    Monsoon wrote: »
    I take it back.

    I'm exhausted today. I've done 33 miles this week in 4 days, and I have no energy this morning. :lol:

    I'd like one of those clip on displays that tells you speed and distance. Probably get OCD trying to beat best times..
  • Bluewednesday
    Bluewednesday Registered Posts: 1,624
    PGM wrote: »
    So still a hefty discount without the vat saving, not bad!

    Bike shops must be doing well with sales, with all the tour de france sucess and fingers crossed the olympics.

    Let's hope so! My husband works for Trek bikes - we even have a room in our house just for his bikes! They're more expensive than our car
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 ? ? ?
    PGM wrote: »
    I'd like one of those clip on displays that tells you speed and distance. Probably get OCD trying to beat best times..
    yeah and me. Not today though!!
  • jamesm96
    jamesm96 Registered Posts: 523
    PGM wrote: »
    I'd like one of those clip on displays that tells you speed and distance. Probably get OCD trying to beat best times..

    Get a phone holder for your bike and download an app! Me and my wife use one when we go out on the bikes together; uses the phone's GPS and gives us all sorts of stats, and a very cool (by cool I mean geeky) map of the route we took.
  • jamesm96
    jamesm96 Registered Posts: 523
    PGM wrote: »
    So still a hefty discount without the vat saving, not bad!

    I know... I wish I'd got in there before the VAT rule was clarified. If you're an employee of your own company (so you also take the Eers NI saving) that £800 becomes £361. (Have I worked that out right?)
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 ? ? ?
    jamesm96 wrote: »
    I know... I wish I'd got in there before the VAT rule was clarified. If you're an employee of your own company (so you also take the Eers NI saving) that £800 becomes £361. (Have I worked that out right?)

    I wouldn't count E'errs NI as no director/owner should be paying it anyway!
  • PGM
    PGM Registered Posts: 1,954
    jamesm96 wrote: »
    Punn intended?



    I'm about to order an £800 bike which, after the tax and NI reduction, will only actually cost me £544. And my employer gets £110 of Employer's NI back too.

    Plus I can lose some of the baby weight I've put on since we had kids!

    :001_tt2:
    Monsoon wrote: »
    Haha, PGM :)


    My bike was about £350. After VAT and CT relief it's cost me £233. Bargain.

    For me, it was just a cheap way of getting a new bike. I took a flyer that my staff wouldn't want to join in - but of course if they did want to, I'd have bought another company bike and done it properly. I'm more than happy to provide health and fitness benefits to my staff. Healthy = happier and more productive.

    I cycled in again today but I neeeed a rest day. I was wrecked trying to get up the hill out of my village. Had to stop 5 times :lol: Will be cycling home by the canal, I've had it with hills!!


    bike 800.00
    less NI 96.00 @ 12%
    less tax 160.00 @ 20%
    final cost 544.00 final cost to employee


    NI ers 102.40 @ 12.8% - employers saving

    I decided to look into the scheme again and see if we can get it going this time, seeing as we're doing more environmental things at work.

    Just reworked the £800 bike example. So it'd cost the employee £544 and give a credit to the company of £102.40. Is that right?

    Is it optional whether you offer payment terms?

    I wanted to hear it in plain English before tackling the legal waffle... :D
  • jamesm96
    jamesm96 Registered Posts: 523
    PGM wrote: »
    Is it optional whether you offer payment terms?

    I wanted to hear it in plain English before tackling the legal waffle... :D

    I believe so, yeah. The HMRC rule is simply that if you loan or hire cycle equipment to employees then there's no Tax or NI on the provision of the bike, nothing specifically says how long it can be rented for or what the employee should / shouldn't pay at the end of the hire term.
  • PGM
    PGM Registered Posts: 1,954
    jamesm96 wrote: »
    I believe so, yeah. The HMRC rule is simply that if you loan or hire cycle equipment to employees then there's no Tax or NI on the provision of the bike, nothing specifically says how long it can be rented for or what the employee should / shouldn't pay at the end of the hire term.

    Thanks Mike, I hadn't realised the saving, pretty much a third off for the employee and worthwhile to the employer, plus the non financial benefits of it all.

    Only other worry; it is the "cycle to work" scheme, how rigorous should your checks be on if the bike will be used for commuting or just Sunday mornings... Probably a bit unfair to put that question to you :D
  • jamesm96
    jamesm96 Registered Posts: 523
    PGM wrote: »
    Probably a bit unfair to put that question to you :D

    You reckon?

    HMRC's EIM says:
    Employees are not expected to keep detailed records of time spent cycling or miles travelled for the purpose of this 'main use' test. Accept that the test is satisfied unless there is clear evidence to suggest that less than half of the use of the cycle or equipment is on qualifying journeys. If it is clear that there is substantial use of the cycle for qualifying journeys, do not make special enquiries about the extent of any other use.

    I read somewhere else that a good example of 'substantial evidence' would be, for example, if the employee lives 50 miles away from his office.
  • PGM
    PGM Registered Posts: 1,954
    jamesm96 wrote: »
    You reckon?

    Won't happen again ;)
    HMRC's EIM says:


    I read somewhere else that a good example of 'substantial evidence' would be, for example, if the employee lives 50 miles away from his office.

    Thanks Mike, you are the cycle scheme expert! So we'll just check it wouldn't be blatantly abused, but other than that they imply they won't be doing checks as such..
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