Seemingly Tax Reduced Benefits Royal Mail My Bundle e.t.c

[magicw]

In the last 18 months I ve signed up for Both Cycle to Work Scheme and The Electronics my Bundle scheme.

My initial understanding of this was that the monies deductible from wages for payment of both benefits would be taking from Gross Salary before tax . In this case £13 a week for the bike and £8 a week for the electronics = £21 a week deducted from gross salary and I would be taxed as normal on the Remaining amount. Hence paying no Tax on this proportion of my Salary.

I ve subsequently received my Tax Code Notice from HMRC and it shows that I receive " Benefits in Kind " totalling £484 and they have subsequently reduced my Tax code to show a tax free amount that is £484 lower than what it would be.

How can RM tout these schemes as a Tax Reduction if all that happens is HMRC reduce the amount you can earn tax free to the same amount as you are supposedly saving using the scheme????????

Surely they are just taking the Tax at a different point.

HMRC say they are acting on the information Royal Mail have given them on a Form 11D . When you contact HR they will only discuss these forms With Senior Managers in relation to Benefit in Kind for having Company Cars. They wont discuss/ disclose them to us humble RMPGs.

To add insult to injury. My C2W scheme actually came to an end today/ Yet RM have included it in my Form 11D return for HMRC for Tax year 2018 starting April 6th aswell.

I cannot confirm this until I recieve my P60 in April / Then HMRC might adjust my code!!!!!!!

Anyone know how this actually works and wether by having the C2W and Electronics bundle I am actually liable to have my Tax Code Changed??????????

[RobertT]

You might find this interesting: https://www.telegraph.co.uk/tax/news/au ... aks-perks/" onclick="window.open(this.href);return false;

[magicw]

If anything that backs my thinking that the Salary Sacrifice element. I.e the payment for the Bike and Electronics which is deducted before Tax should remain Tax Free.

By removing any Benefit I receive from the Total amount I am able to earn before paying Tax just means that I pay the Tax anyway! Surely???? So net result no Tax Benefit at all to me. But I reckon Royal Mail will still be receiving a benefit through reduced N.I contributions??????????

[wallop]

I know on the bikes they reduce your code by what they consider to be the fair market value of the bike at the end of your contract.
This lets you keep the bike.
Up until that point the bike is the property of the employer and you are essentially leasing it.
Never heard of anyone trying to return the bike to royal mail though which technically you should be able to do.

[magicw]

Okay so I ve paid 13.04 x 72 For the Bike so that's £ 938.88 for £1000 bike loan.

They now have reduced my Tax Free income by £484 , add that to the £938.88 I physically paid for the bike through a deduction of £13.04 for 72 weeks ( 18 months)

Then in reality the £1000 bike has cost me £1422,88 SOME BLOODY TAX SAVING THAT!!!!!!!!!!!! cant be right surely.

[wallop]

What you have done is hired a bike for 18 months from your employer what you've paid is 72 payments of £13.04 off your gross wage.
In real terms if you consider tax and ni to be roughly 32% you've paid 72 x £8.87 = £638.44
Remember this is "real" money the same as you'd be spending if you pay cash for the bike. ie The tax and ni has already been paid on the cash in your pocket.
At the end of this hire period to own the bike outright you are basically given the bike by Royal Mail who transfer the bike to you for £1.
Now the good old tax man views this as a benefit in kind and taxes it accordingly using the following to work out what they consider to be a fair market value for an 18 month old bike.
If the original price of the bike was less than £500 16% if it was greater than £500 21%
So in your case they consider your bike to be worth £210
They claw this back by reducing your tax free allowance.
So you've paid £638.44 + £210 =£848 for a £1000 bike.

[NewPostieUK]

They now have reduced my Tax Free income by £484 , add that to the £938.88 .

Why add that?

IF the amount you can earn before paying tax has reduced by £484 it means that you are paying 20% on £484 more than you were before. So thats about £96 more.

[magicw]

Yer got it. Its not a Gross amount of £484 its the tax at my taxable rate ( about 22% ) on that , which I think is about £107.