Author Topic: Tax free bikes?  (Read 1231 times)

CrazyEnglishTriathlete

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Tax free bikes?
« on: June 04, 2019, 12:58:44 pm »
After Richard Carapaz's victory in the Giro d'Italia, the President of Ecuador has announced the removal of taxes on bicycles.

http://www.cyclingnews.com/news/giro-ditalia-victory-gives-carapaz-sporting-immortality-in-ecuador/

Given we are about to get a new prime minister - how about a pitch that includes the same promise if Froome wins a 5th Tour de France??
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Kim

  • Timelord
Re: Tax free bikes?
« Reply #1 on: June 04, 2019, 01:19:52 pm »
How about we take the sport out of it?

And make the electric vehicle subsidy apply to e-bikes, while we're at it.
To ride the Windcheetah, first, you must embrace the cantilever...

Re: Tax free bikes?
« Reply #2 on: June 06, 2019, 01:24:06 pm »
brian at The Washing Machine Post talks about this today and comments that a £5k bike from America becomes £5689 with duty/vat which is a big chunk of change.

Re: Tax free bikes?
« Reply #3 on: June 06, 2019, 04:58:11 pm »
I’m guessing that the primary motive behind the Ecuadorean president’s decision to remove import duty needs bikes is to make himself popular rather than encourage cycling which may be a happy byproduct.
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ian

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Re: Tax free bikes?
« Reply #4 on: June 06, 2019, 05:02:24 pm »
I'm not sure we should be subsidizing £5k bikes, rather than something more practical.

That said, I don't think cost is necessarily the issue, a bike is always going to be a lot cheaper than public transport or a car. It's making cycling practical and safe (perceived or otherwise). That's a bigger failure and won't be solved by knocking £25 off the price of a bike.
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Kim

  • Timelord
Re: Tax free bikes?
« Reply #5 on: June 06, 2019, 05:17:02 pm »
I'm not sure we should be subsidizing £5k bikes, rather than something more practical.

For some people a £5k bike is practical.  You won't get a lot of change from that if you're buying recumbent trikes or tandems with electric assist for example.  Also applies to machines specialised for a particular form of cycling: cargo cycles, velomobiles etc.  One Less Car applies, and even if people are only cycling for sport/leisure, that's probably worthwhile from a public health perspective. 

Indeed, the cost of accessible cycles (along with the Cycle2Work scheme's £1000 de-facto limit) was one of the main barriers[1] cited in last year's Wheels For Wellbeing survey of disabled cyclists.

At one point, you were able to purchase cycles adapted for use by a disabled person VAT-free, but the taxman clamped down on that.  (It also meant that disabled people able to use an un-adapted cycle as a mobility aid had to pay the full price.)


[1] Second only to actual barriers: Unsurprisingly "Infrastructure" came top.
To ride the Windcheetah, first, you must embrace the cantilever...

ian

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Re: Tax free bikes?
« Reply #6 on: June 06, 2019, 06:24:24 pm »
Yes, but will it move the meter on that criminally low percentage of people in the UK who actually cycle?

I doubt it and frankly I'm sure the majority of the effective subsidy will go to people who don't need it (middle-class blokes in lycra) rather than those who do (those you cite).
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Kim

  • Timelord
Re: Tax free bikes?
« Reply #7 on: June 06, 2019, 07:02:33 pm »
Yes, but will it move the meter on that criminally low percentage of people in the UK who actually cycle?

Not really, but that would require infrastructure.


Quote
I doubt it and frankly I'm sure the majority of the effective subsidy will go to people who don't need it (middle-class blokes in lycra) rather than those who do (those you cite).

That's not a reason not to do it, thobut (much as the average Tory would disagree).  Better to remove a barrier to cycling (even if it does help a few MAMILs buy some new carbon bling), than to keep the barrier in place for fear of it being exploited.
 It's like student loans, in that respect.
To ride the Windcheetah, first, you must embrace the cantilever...

fd3

Re: Tax free bikes?
« Reply #8 on: June 07, 2019, 10:35:04 am »
On the subject of cycleschemes' £1k limit - I'm amazed that it has been maintained at that level.  When it was first introduced (~15 years ago) I remember ringing Mercian to see whether I could buy a complete bike at that price (I could - just about).

While VAT-free bikes would have a bigger effect on velomobile purchases, it will still be proportionally a big chunk of cash for someone who can only afford a £300 bike.
[/I could be wrong]

Mr Larrington

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Re: Tax free bikes?
« Reply #9 on: June 07, 2019, 11:41:12 am »
And since velomobiles are made in ABROAD, where the FOREIGNS come from, Brexit will further muddy the waters as if there is one thing that is more certain than DETH and taxes it's that disgraced former defence secretary Liam Fox has no idea what a velomobile is.
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Re: Tax free bikes?
« Reply #10 on: June 07, 2019, 12:30:17 pm »
FWIW I would probably never have made the switch to being a full-time cycle commuter (or at least delayed it significantly) if I hadn't been able to obtain a multiple-thousands bike (recumbent) via the cycle scheme. In turn I would then likely have done less touring, been less interested in the culture, not found audax, and remained significantly more obese.

Did I "need" the tax break? By any reasonable measure, no; I've been fortunate in many ways and could have afforded the bike without it. But psychologically it definitely pushed me into making the choice - and isn't that exactly how these things are supposed to work?

Re: Tax free bikes?
« Reply #11 on: June 07, 2019, 12:47:19 pm »
On the subject of cycleschemes' £1k limit - I'm amazed that it has been maintained at that level.  When it was first introduced (~15 years ago) I remember ringing Mercian to see whether I could buy a complete bike at that price (I could - just about).

While VAT-free bikes would have a bigger effect on velomobile purchases, it will still be proportionally a big chunk of cash for someone who can only afford a £300 bike.
The £1000 is because if an employer offers a loan above that amount they have to be accredited under the consumer credit act. The price of a bike is somewhat irrelevant.
Some employers who are accredited (banks etc) offer larger amounts under the scheme.

The range of things that are VAT free or VAT reduced is bizarre. Eg a book on dead trees is VAT free, but the same book on a kindle isn't.

Re: Tax free bikes?
« Reply #12 on: June 07, 2019, 12:53:10 pm »
Given we are about to get a new prime minister - how about a pitch that includes the same promise if Froome wins a 5th Tour de France??
It'd have to wait till we're out of the EU, the classifications are set by the commission, though there's some flexibility on the rates.
There are already proposals for reform which would allow bikes to be at zero or reduced rates, though it doesn't include E-Bikes which would remain at a minimum of 15%
https://ecf.com/news-and-events/news/eu-vat-reform-and-its-implications-cycling-explained

Cudzoziemiec

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Re: Tax free bikes?
« Reply #13 on: June 07, 2019, 05:18:56 pm »
Interesting. I somewhat suspect the general trend of taxes post-Brexit will be downwards on income tax and upwards on sales taxes.
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ian

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Re: Tax free bikes?
« Reply #14 on: June 10, 2019, 09:20:21 am »
I think anyone that thinks we'll pay less tax post-EU has been dropped on their head from high altitude. Well, not if you're not already a vastly rich 'wealth generator', of course.
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Mr Larrington

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Re: Tax free bikes?
« Reply #15 on: June 10, 2019, 12:54:41 pm »
Butbutbut whither the Brexit dividend?

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Re: Tax free bikes?
« Reply #16 on: June 12, 2019, 01:31:46 pm »
On the subject of cycleschemes' £1k limit - I'm amazed that it has been maintained at that level.  When it was first introduced (~15 years ago) I remember ringing Mercian to see whether I could buy a complete bike at that price (I could - just about).

While VAT-free bikes would have a bigger effect on velomobile purchases, it will still be proportionally a big chunk of cash for someone who can only afford a £300 bike.
The £1000 is because if an employer offers a loan above that amount they have to be accredited under the consumer credit act. The price of a bike is somewhat irrelevant.
Some employers who are accredited (banks etc) offer larger amounts under the scheme.

Indeed, my employer had a Consumer Credit License and so I could get a £1500 voucher on the scheme (back in 2009). I also bought a bike that cost more than that by paying the difference (on a credit card no less, despite that officially not being an option).

Removing VAT from bikes would make the Cyclescheme even better for most people as the £1000 that most people could use would go 20% further. Or they could buy the same bike they wanted and not have to "borrow" as much.
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Re: Tax free bikes?
« Reply #17 on: June 12, 2019, 01:42:25 pm »
On the subject of cycleschemes' £1k limit - I'm amazed that it has been maintained at that level.  When it was first introduced (~15 years ago) I remember ringing Mercian to see whether I could buy a complete bike at that price (I could - just about).

While VAT-free bikes would have a bigger effect on velomobile purchases, it will still be proportionally a big chunk of cash for someone who can only afford a £300 bike.
The £1000 is because if an employer offers a loan above that amount they have to be accredited under the consumer credit act. The price of a bike is somewhat irrelevant.
Some employers who are accredited (banks etc) offer larger amounts under the scheme.
Indeed, my employer had a Consumer Credit License and so I could get a £1500 voucher on the scheme (back in 2009). I also bought a bike that cost more than that by paying the difference (on a credit card no less, despite that officially not being an option).
Removing VAT from bikes would make the Cyclescheme even better for most people as the £1000 that most people could use would go 20% further. Or they could buy the same bike they wanted and not have to "borrow" as much.
NEWSFLASH - Guidance issued this week goes a long way to removing the £1,000 cap, mainly it seems with the intention of encouraging E-Bikes, the new guidance makes it clear that FCA authorised third party providers are not restricted.  I don't know how many of the current providers are authorised, though I imagine any that aren't soon will be.
https://www.gov.uk/government/news/government-ushers-in-new-era-of-green-commutes-with-e-bike-cycle-to-work-scheme

Re: Tax free bikes?
« Reply #18 on: June 14, 2019, 09:01:19 am »
One of the chief obstacles used by the Gubishment to defend not removing VAT on products (e.g. sanitary stuff to help reduce period poverty) or increasing it on others (solar panels, home insulation) was that to do so would be state aid to particular companies/industries under EU rules.

Since we're leaving the EU we can do what we like now eh?

However, removing VAT on bikes and encouraging cycling would also therefore reduce income from forecourt fuel sales so the tax man would see a double hit on revenue.

Nonetheless, it should help improve the nation's physical and mental health through more exercise and improved air quality and reduce demand on the NHS which frankly all sounds like it should come out in the wash as being a cost neutral exercise.

It would also piss Jeremy Clarkson off :thumbsup: :thumbsup: :thumbsup:

bludger

  • Randonneur and bargain hunter
Re: Tax free bikes?
« Reply #19 on: June 14, 2019, 10:49:07 am »
The European Commission is in the process of reforming EU-wide VAT rules which will probably amount to full waivers of VAT on pedal cycles. You can bet your bottom dollar that it'll happen with them a damn sight sooner than in the UK Government, which is run by the kinds of people who dial for a Taxi from Euston to Parliament on our dime https://www.bbc.co.uk/news/uk-44510120.

https://ecf.com/news-and-events/news/eu-vat-reform-and-its-implications-cycling-explained
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https://bit.ly/2Xg8pRD


fd3

Re: Tax free bikes?
« Reply #20 on: June 27, 2019, 12:29:27 pm »
Paul, does that imply that only 3rd party provider schemes can do this, or is it even more restrictive to the hire purchase type schemes?
[/I could be wrong]