Green Commute Initiative

A chance to try an e-bike on the Quietways of the City of London with some culture thrown in! More information here: www.quietways.london

Now after all that argy bargy does anyone fancy a free e-bike cultural tour? If you're in London take a look at this: www.quietways.london A chance to try a decent range of e-bikes free of charge and learn something of the amazing history of our capital city. Did I mention it was free?

Having thought about the original concept I can see what Whoosh is trying to do. However I believe there is a fundamental problem with the approach of low rentals and then a payment at the end to account for the price of the bike. This is a hire purchase transaction. Even if you call it something else. IMO HMRC will simply say it's a hire purchase and that doesn't qualify for C2W because the employee can't own the bike. http://www.legislation.gov.uk/ukpga/2003/1/section/244 condition 2 There is also the matter of issuing a Hire Purchase agreement without FCA authorisation. Courts often rule an agreement a sham if it's clear it's purpose is something other than it says it is. If they did that you are in real trouble. This is why all the C2W providers have a hire arrangement and then in a seperate transaction dispose of, hire or loan the bike. This is why we spend £600 an hour with Eversheds, the UK's leading credit lawyers. Come to think of it maybe 5% is too cheap

The employer can't give it away. HMRC have a table of fair market value you must use when the transfer takes place. They simple work on the age of the bike: https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim21667 Page 2

Gross salary sacrifice will be £1,000 / 12 = £83.33 Where do you get £67 from?

I'm sorry I don't understand your calculations.

The issue is the hire of the bike not the credit. Employers providing loans to employees are not included in the CCA for loans of less than £15k so the salary sacrifice isn't a regulated activity. Consumer hire is, so the employer must be regulated for Consumer Hire for hire agreements over £1K. We hire the bike directly to the employee using our FCA authorisation. At the end of the scheme, we make the employee a free of charge loan of the bike at the end of the initial hire and appoint the employee as our agent to dispose of the bike to a third party of their choosing at the end of the loan. They can of course keep the bike. The transfer value for tax purposes at that point is negligible. This is what other C2W providers do as well but they charge the employee a 7% deposit. We don't. As regards your CC licence it's probably not for Consumer Hire which is what you'll need. It's now all FCA and no longer CC.

This guidance is outdated. this is the current guidance. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/457866/cycle-to-work-guidance-update.pdf Scroll down to section 2 at the bottom of page 2

GCI is pretty simple for the employer. They pay us what the reseller charges for the bike. We don't dictate pricing. We’re open about what we charge resellers. (5% of the sale price) We create and send out all the agreements for electronic signature and then send the employer the amount of the salary reduction. So all they have to do is pay us and make the salary reduction. Takes the average employer about 10 minutes because we do everything else. There's no risk to the employer of wrong information or documents that will cause them a problem. C2W agreements are subject to lots of legal requirements such as the distance selling regulations, employment law, and of course the consumer credit act. You may not need to be FCA authorised for less than £1,000 but you are still subject to the Consumer Credit regulation. If a disgruntled employee goes to the Citizen’s Advice etc your agreements need to be correct. Otherwise you can’t enforce them. If they are for more than £1,000 and you’re not FCA regulated then the FCA will pursue you and they have teeth. Also agreements need to comply with the regulations or the employee may lose the tax break. Things like ownership, part ownership etc can all cause a problem and a discussion with HMRC. From a reseller’s point of view GCI is really fast with the money in their account often within a couple of hours of us being paid. We have lots of happy customers and resellers. Don’t get me wrong I have no problem with employer’s doing their own thing. We’ll even provide advice but it’s like everything else the Devil is in the detail. Oh! And we don’t charge employees the 7% end of scheme fees our competitors do. We also manage the whole process so nothing for employers to do.

If you are a VAT registered business you must account for the VAT on the service you provide. Since the Astra Zeneca ruling, VAT is payable on the gross salary sacrifice regardless of who owns the bikes. We advise people who are unsure to call the VAT / HMRC helpline to get a definitive answer. They are really helpful. 0300 200 3700

Hello I’m Rob from the Green Commute Initiative. This is the correct information: As a VAT registered business you can either claim the VAT back on the purchase and then at the end of the salary sacrifice issue an invoice to the employee for the gross amount of salary sacrifice including VAT. (The salary sacrifice amount includes VAT) or you can simply not claim the VAT back making a note in your accounts to this effect. We recommend the second method but either is fine. As long as the VAT is paid HMRC are happy. Call your VAT helpline to confirm. This is the revised guidance on VAT. See section 2 at the bottom of page 2. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/457866/cycle-to-work-guidance-update.pdf So on the £1,000 example the HR employee will save £420 (40% tax and 2% NI) An employer can give the £138 employer’s NI saving to the employee (13.8%) making the total saving £558 so the bike could cost as little as £442 but that’s the best that’s possible. Lower rate employees will save £ 320 (20% tax and 12% NI) We tell people not to reclaim the VAT is it makes the accounting much easier. PLEASE ALSO BE AWARE OF THIS To get the tax benefits in a C2W scheme the employee cannot own the bike. So they have to hire it. Any agreement that provides something where the user won’t gain ownership such as Hire purchase is a hire agreement. Any hire agreement that last longer than three months is a regulated hire agreement under the Consumer Credit Act and if you issue one without being Authorised and Regulated by the FCA you’re committing an offence. There is an exemption for C2W schemes up to £1,000 hence the limit. You can see it here: https://www.handbook.fca.org.uk/handbook/PERG/2/11.html scroll down to C2W. So any employer issuing a hire agreement to their employee over £1,000 without being regulated by the FCA for consumer hire is committing a criminal offence. GCI Ltd is regulated the FCA so can hire anything of any value to anyone.