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Ride to work - and get Tax back !


The Guy in Pink
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The Pink Daughter in London  wanted advice on buying a bike to ride to work, so I went to www.Chainreaction to see what was on offer. I found a Government scheme which will result in her saving 50% of the cost of the bike!


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http://www.chainreactioncycles.com/Interface/Images/restyle/ride2.jpg

http://www.chainreactioncycles.com/Interface/Images/restyle/blank.jpghttp://www.chainreactioncycles.com/Interface/Images/restyle/overview.jpg

As part of the ?Green Transport Plan? the UK Government has introduced the ?Ride to work Scheme?. This scheme allows an employee to save up to 50% on the cost of a new bicycle to be used for commuting.
 http://www.chainreactioncycles.com/Interface/Images/restyle/here.jpg
 
1. The Employer buys the Bicycle from Chain Reaction Cycles.

2. The Employer can claim back the VAT on the purchase.

3. The VAT free price of the Bicycle is divided by 12 and this amount is deducted from the Employees monthly salary via a Salary Sacrifice. Throughout these 12 months the employee is hiring the bicycle from the employer. The Employee is making additional savings as they will not pay any Income Tax or National Insurance on the amount deducted as a Salary Sacrifice.

4. At the end of the 12 months hire agreement, the Employer may ?sell? the Bicycle to the Employee for a nominal fee.


 http://www.chainreactioncycles.com/Interface/Images/restyle/save.jpg
CRC Price?900.00
Accessories?100.00
Total Goods ?1000.00
Vat claimed -?148.93
Cost to Employee?851.07
  
Tax Savings 40% ?340.40
National Insurance saving 1% ?8.51
Cost to Employee ?502.52
  
Savings on CRC Price 50% 
Please note that the savings are made from the already discounted CRC prices so the savings from the RRP of the bicycle are likely to be even better.

http://www.chainreactioncycles.com/Interface/Images/restyle/employ.jpg
It is the responsibility of the employer to administer the ?Ride to Work Scheme? so that the tax benefits are passed on to the Employee. Implementing the scheme is fairly straightforward. Here is what you need to do

1. Complete the forms and purchase the bicycle

a. Your employee will provide you with a completed order form itemising the bicycle and accessories they wish you to purchase under the scheme. They should also provide you with a pre contract agreement and the hire agreement.
You can download all these forms here.

b. Complete the ?Pre-contract information?. (The pre-contract is required under the Consumer Credit Act 1974)


c. Prepare the ?Hire Agreement?, sign it and give it to the Employee to sign


d. Order the bicycle from ChainReactionCycles either by sending us the order form along with payment or simply by ordering on-line or over the phone. If you prefer you can also come and see us at our store. We accept payment from all major credit cards, Bank Transfer and Cheque.


The minimum amount that can be spent is ?250. There is no maximum amount but you must be aware that your business will need a credit licence if the bike is more than ?1000. However it is perfectly acceptable for the employee to ?top up? the purchase with their own funds.


On receipt of payment CRC will dispatch the goods to the Employers address, or the Bicycle can be collected from the Chain Reaction Store. (It is also possible to send the goods to the employees address but only if payment is made by Cheque or Bank Transfer)

2. Claim the VAT back

The bike will be supplied with an Invoice. Use this Invoice to claim the VAT back as a business purchase.

3. Implement the Salary sacrifice scheme

Take the VAT free price of the bicycle and divide it by the number of months the hire agreement covers (We recommend 12 months but the maximum is 18 Months). This amount will equal the monthly hire of the Bicycle. This monthly salary sacrifice should be deducted from the employees gross monthly salary, before Tax and National Insurance is calculated.

4. Completion of the hire agreement

Once the hire agreement has been completed you have one of two options.

You can retain ownership of the bicycle and let the employee continue to use the bicycle without incurring a hire fee


You can transfer ownership of the bicycle to the employee by selling it to them for a nominal fee.

http://www.chainreactioncycles.com/Interface/Images/restyle/import.jpg

The Employer must be VAT registered in order to claim the VAT back on the purchase price of the bicycle

The Employer will also save, as there is no Employer NIC to pay on the salary sacrifice

The Employee must mainly use the bike for a journey or part of a journey between the employee?s home and work place. Or from one workplace to another

The Employee is responsible for the maintenance and insurance of the bike

If the Employee leaves employment before the hire term is completed the employee is required to pay compensation to the employer. This compensation is usually the fair market value of the goods. Payment of this compensation should transfer ownership to the former Employee

The Employee can purchase a complete bicycle and associated safety equipment as part of the scheme. It as also possible to purchase more than one bicycle if for example, if the employee needed a bicycle at either end of a train journey

The Employee must be on your payrole and pay tax through PAYE

The Employee must be over 18

The salary sacrifice must not push the employees salary below the national minimum wage

The employees contract period must be longer than the hire period

The Scheme must be made available to all employees

The Employer owns the Bicycle until ownership is transferred at the end of the hire period http://www.chainreactioncycles.com/Interface/Images/restyle/benefit.jpg

As an employee you can benefit from the Cycle to Work scheme. The process is very simple. Basically you employer will purchase a bicycle and you will hire the bicycle off your employer over a time period (We recommend 12 months but the maximum is 18 Months). The hire payments will add up to the VAT free price of the bike. This means that you will save both the VAT + the tax and National Insurance that you would have paid on the deductions for the hire. These savings can add up to 50% off the price of the bicycle.

To take part in the scheme follow these simple steps.

Inform your employer that you would like them to take part in the scheme, providing them with this information pack which you can download in full.

On agreement with your employer, choose your Bicycle and accessories from www.ChainReactionCycles.com, taking note of the product ID of the items you wish to purchase under the scheme.

Fill in the order form and pass it to your employer ensuring they have all the forms provided in the information pack.

Your employer will complete the ?Pre-Contract Agreement? and give it to you to sign.

Your employer will then complete the hire agreement from and this will be signed by both you and your employer.

Your employer will then order the bicycle and accessories from ChainReactionCycles either by posting a copy of the order form with payment, or by simply ordering online.

Your Employer will then implement the salary sacrafice were the hire fee will be deducted from your monthly salary for a period of 12 months.

Once the hire period is over, your employer can continue to let you use the bicycle without incurring a hire fee. Or, your employer can transfer the ownership of the bicycle to you for a nominal fee. http://www.chainreactioncycles.com/Interface/Images/restyle/notes.jpg

The amount saved on the bicycle will depend on the rate of tax and national insurance

Your Employer must be VAT registered in order to claim the VAT back on the purchase price of the bicycle. If your employer is not vat registered your savings will be limited only to the savings made on Tax and National Insurance.

You must mainly use the bike for a journey or part of a journey between the employee?s home and work place. Or from one workplace to another.

You are responsible for the maintenance and insurance of the bike

If you leave employment before the hire term is completed you are required to pay compensation to your employer. This compensation is usually the fair market value of the goods. Payment of this compensation should transfer ownership to you

You can purchase a complete bicycle and associated safety equipment as part of the scheme. It as also possible to purchase more than one bicycle if for example, you needed a bicycle at either end of a train journey.

You must be on your Employers payrole and pay tax through PAYE

You must be over 18

The salary sacrifice must not push your salary below the national minimum wage

Your Employer owns the Bicycle until ownership is transferred at the end of the hire period

 

http://www.chainreactioncycles.com/Interface/Images/restyle/download.jpg


Full information Pack including all forms
 

http://www.chainreactioncycles.com/Interface/Images/restyle/pdf.jpg

(925kb)
Order Form  http://www.chainreactioncycles.com/Interface/Images/restyle/pdf.jpg(333kb)
Pre-Contract Information http://www.chainreactioncycles.com/Interface/Images/restyle/pdf.jpg(340kb)
Hire Agreement http://www.chainreactioncycles.com/Interface/Images/restyle/pdf.jpg(381kb)

For any more information on the Ride To Work scheme contact us on : ridetowork@chainreactioncycles.com
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Clap Come on minister Manual, lets implement this in SA and get some cars off the N1!

Christie2007-06-15 14:40:23
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It is a good marketing  from Chainreaction also.  My daughter immediately started looking at something at about twice her original budget. Her employer is quite happy to implement the scheme.

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You are dead right Christie, maybe he is on manual and should change to automatic, Trevor Manuel may be due for an ovehaul.

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This is awesome. Great for the RSA as well. ShaunH, slowpoke, Latrenus Emmer where do we start?

 

 

 

This is something that the CSA as the "official" representatives of cycling should invest some time on.KonaFan2007-06-17 10:21:23

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Come on guys (read CSA), speak to oom Trevor to get this implimented!!!  Only thing to keep in mind is us guys who already have a bike and commute.

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i think you guys are forgetting one important fact!

Motorists in south africa dont give a sh*t about cyclists. even if there was a scheme like this (which would be great), it still wont change the fact that cyclists seem to be a hated species and if more are on the road during peak time, there would just be more deaths. Its the old song, all over again, mutual respect....... but unfortunatly it doesnt seem to work. on 99% of the time we ride single file, but still get motorists side-swiping us and knocking us off our bikes.

I wish i was wrong, but it seems the law has failed cyclists seems .................
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My tax is a little bit rusty, and not 100% op to date (used to be a "bean counter" before I opened a bike shop...)

 

But I think to local SARS, does not support any type of tax schemes that involve a salary sacrifice.

 

But the powers that be in cycling,  should certainly look at trying to twist Mr. Manual's arm to try implement something like this. Thumbs%20Up
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