What is the fair market value payment?
A fair market value (FMV) payment is the amount that a willing buyer would pay to a willing seller to purchase certain property at a particular point in time. This cannot be determined in advance as this would affect the tax relief, however generally it is anticipated that the FMV would be in the region of 5% of the cost of the bike. 5. If I am paying for the cost of the bike through the loan period and then want to buy the bike at a FMV, won’t I end up paying more than I would have paid for the bike than if I had bought it directly from the shop? No, you have the option at the end whether to purchase the bike so there is no requirement to actually purchase it at the end of the loan period. However if you do decide to purchase the bike you will still make a saving because of the tax and NI savings and you have the advantage of spreading the cost during the loan period.
A fair market value payment is the amount that a willing buyer would pay to a willing seller to purchase certain property at a particular point in time. See also FAQ 10. At present there are no guidelines for judging the fair market value but Cyclescheme have established a fair market value of 2.5% after 12 months.
