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Electric bike BiK

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Ltd client has bought a 2nd hand e-bike from Ebay for the director. 
 

as I understand it, Cycle2Work isn't available as the purchase wasn't through an authorised provider.

Any chance the BiK matches that of an electric vehicle, rather than a normal asset?

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By CJaneH
22nd Jul 2021 14:17

To little information
Is this basically a director = shareholder company?
Is director using said bike for business trips?
is directors using said bike for regular commuting?
Before we consider legislation should we consider if this is just a personal purchase for the director and/or the directors family.

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ALISK
By atleastisoundknowledgable...
22nd Jul 2021 14:23

Yes Director/shareholder company. Client to use for regular commuting & the occasional trip to a supplier (Booker / Makro etc)

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By Wanderer
22nd Jul 2021 14:36

atleastisoundknowledgable... wrote:

as I understand it, Cycle2Work isn't available as the purchase wasn't through an authorised provider.

You understand wrong, there is no such requirement.
gov.uk wrote:

As an employer, lending or hiring bikes to employees doesn’t count as an expense or benefit - as long as they’re available to all employees and mainly used for getting to work.


Don't mix up the issues of the employer acquiring the bike and the method of allowing the employee use.
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Ivor Windybottom
By Ivor Windybottom
22nd Jul 2021 14:35

Authorised provider?
Are you confusing the requirement for £1,000+ loans to be provided by a licenced credit broker or similar?

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Replying to Ivor Windybottom:
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By Wanderer
22nd Jul 2021 14:38

Even that's been largely kicked into touch if it is structured to avoid it.

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Replying to Wanderer:
ALISK
By atleastisoundknowledgable...
22nd Jul 2021 15:00

Wanderer wrote:

Even that's been largely kicked into touch if it is structured to avoid it.

So it’s still possible to turn the situation around so it can be Cycle2Work?

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Replying to atleastisoundknowledgable...:
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By Wanderer
22nd Jul 2021 15:21

atleastisoundknowledgable... wrote:

So it’s still possible to turn the situation around so it can be Cycle2Work?

Yep:-

https://www.gov.uk/government/publications/cycle-to-work-scheme-implemen...

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Replying to Wanderer:
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By atleastisoundknowledgable...
22nd Jul 2021 15:39

Thanks

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Replying to Wanderer:
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By atleastisoundknowledgable...
22nd Jul 2021 15:38

Wanderer wrote:

Even that's been largely kicked into touch if it is structured to avoid it.

How can it be avoided/side-stepped?

Thanks

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Replying to atleastisoundknowledgable...:
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By Wanderer
22nd Jul 2021 16:29
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Replying to Wanderer:
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By atleastisoundknowledgable...
22nd Jul 2021 16:35

So as long as the repayment terms are not more than 12 months, all’s fine?

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Replying to atleastisoundknowledgable...:
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By Wanderer
22nd Jul 2021 16:47

It says more than that.

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Replying to Ivor Windybottom:
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By atleastisoundknowledgable...
22nd Jul 2021 15:00

Ivor Windybottom wrote:

Authorised provider?
Are you confusing the requirement for £1,000+ loans to be provided by a licenced credit broker or similar?

Yes I think so.

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By kestrepo
22nd Jul 2021 16:58

I think you have discounted the idea that it is outside of the scope of the cycle to work scheme a bit too quickly! As far as I recall the cycle to work scheme does not have to be run through a specific provider. A company can buy a bicycle and then hire it through a hire agreement to an employee or Director using salary sacrifice. Link to the .gov guidance for employers below:

https://www.gov.uk/government/publications/cycle-to-work-scheme-implemen...

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Replying to kestrepo:
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By atleastisoundknowledgable...
22nd Jul 2021 18:38

kestrepo wrote:

I think you have discounted the idea that it is outside of the scope of the cycle to work scheme a bit too quickly!

Me too! I thought it had to be via an authorised provider/broker.

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Replying to atleastisoundknowledgable...:
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By Hugo Fair
22nd Jul 2021 21:41

Never dealt with these schemes, but I'm confused over everyone's conclusion.

The same GOV.UK link has been provided by both Wanderer (at 22nd Jul 2021 15:21) and kestrepo (at 22nd Jul 2021 16:58), in which it touches on the Loan option but focusses on Salary Sacrifice 'rules'.
It also says that "the owner (the employer) under the consumer hire agreement may need Financial Conduct Authority (FCA) authorisation ... (although) there is an exemption from needing this authorisation where the owner is the employer
and the total value of the goods being hired does not exceed £1,000."

So, as far as I can see, as well as complying with all the other rules (as set out across the 24 page document) ... in the OP's scenario the bike (and any other associated assets acquired for the same scheme - which must be available to all employees) must not have a retail value in excess of £1,000. Otherwise FCA authorisation (of employer or or 3rd-party provider) does indeed raise its head?

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Replying to Hugo Fair:
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By Wanderer
23rd Jul 2021 07:44

No, the deals can be structured so the £1,000 limit is no longer relevant.

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Replying to Hugo Fair:
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By kestrepo
26th Jul 2021 10:33

It is my understanding that as long as the amount is paid back in full within 1 year it can be over £1K. The pinch point comes with the residual value of the bike after 1 year though in my opinion.

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By The Dullard
23rd Jul 2021 00:38

OFFS this is the blind leading the completely fuching stupid (quite frankly). The cycle to work scheme is a red herring. It relies on an exemption in ITEPA 2003 (s 244 for anybody that actually bothers to refer to the law of the land). Nothing else matters other than the exemption in this situation, and it probably applies. As a general rule of thumb though, don't be taking money from people for providing advice in matters in relatio to which you are completely clueless.

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Replying to The Dullard:
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By Wanderer
23rd Jul 2021 08:02

There are in, fact, far more things that 'matter' with the provision of bicycles by employers.
1. S244 that you point out.
2. The salary sacrifice provisions if paid for by the employee this way.
3. The consumer credit licence provisions for the employer, if providing the finance.
4. The minimum wage requirements.
5. Employer liability.
6. Insurance.
7. Treatment in the employer's accounts.
8. Capital Allowances
9. VAT treatment of purchase.
10. VAT treatment of hire.
11. Financing of the purchase by the employer.
+ no doubt some more.

You may be calling people blind, stupid & clueless, but you have been blinkered into concluding it is only 1. that matters. There's more to life than tax.

Take that from someone who has bothered to read the law on all these.

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Replying to Wanderer:
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By atleastisoundknowledgable...
23rd Jul 2021 08:26

1. Agreed.
2. Easy
3. Wanderer’s link reads as ok if payment plan < 12 months.
4/5. Easy
6. Who should insure it? Employer as the owner?
7-11. Easy

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By Tax Dragon
23rd Jul 2021 10:04

Children, children... enough now.

None of the loan/salary sacrifice/consumer credit stuff is relevant to the scenario in the OP. (Well, OK, I concede... who knows?! The sentence "Ltd client has bought a 2nd hand e-bike from Ebay for the director" could mean many different things.) But suppose it means a company bought a bike and makes that bike available to a director to use as specified. No transfer of ownership, no loans, no salary sacrificed, no nothing. It's as simple as it says on the tin.

Then it's just s244 (and interpretative provisions, including s249) that you're looking at.

Btw (Dragon Tangent Alert): note the difference between "in connection with" in s249 and "in the performance of" in eg Ss336 and 337.

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Replying to Tax Dragon:
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By atleastisoundknowledgable...
23rd Jul 2021 10:08

Tax Dragon wrote:

The sentence "Ltd client has bought a 2nd hand e-bike from Ebay for the director" could mean many different things.) But suppose it means a company bought a bike and makes that bike available to a director to use as specified. No transfer of ownership, no loans, no salary sacrificed, no nothing. It's as simple as it says on the tin.

My bad - yes that’s exactly what I meant CURRENTLY. Personal beliefs aside of other members, anything in the accounts etc can be adjusted as required.

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Replying to atleastisoundknowledgable...:
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By Tax Dragon
23rd Jul 2021 10:14

Why would you change it? I can see a benefit to you - fees - but none for the client.

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Replying to Tax Dragon:
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By atleastisoundknowledgable...
23rd Jul 2021 10:42

I meant ‘anything can be amended to fit required criteria, other than the physical payment for the bike, if advantageous for the client’. By which I mean ‘if we need to adjust something so that it is eligible for the C2W scheme, that’s not a problem (other than who paid for the bike)’.

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Replying to atleastisoundknowledgable...:
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By Tax Dragon
23rd Jul 2021 10:53

But what does any of that mean? If s244 applies, what more are you looking for? (A point Dulls already made with more colour above. The point already made, I'm adding nothing. I'm out.)

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Replying to Tax Dragon:
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By Hugo Fair
23rd Jul 2021 13:57

There *may* be an interesting point that's got lost in all the above posts ... in that I can see no confirmation that an e-bike is a 'cycle' as referred to in ITEPA 2003 s244 (which says definition is set in RTA 1988 s192(1) - “cycle” means a bicycle, a tricycle, or a cycle having four or more wheels, not being in any case a motor vehicle). Does the e-motor make it a motor vehicle?

But I take the point (which is why I was confused before) that two separate things had got entwined:
a) Is Cycle2Work available (as purchase wasn't through an authorised provider)?
A: Yes, subject to comments above regarding value/structure of loan.
b) Is Cycle2Work the only way to avoid BiK for the Director?
A: Not actually asked, but would have been answered No (see ITEPA 2003 s244)

FWIW, as far as I can see the main difference between relying on s244 or on setting-up a Cycle2Work scheme are ... whether the e-bike is intended to end up as the property of the company or of the director (and in the latter case whether salary sacrifice is the optimal way to pay for it).

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Replying to Hugo Fair:
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By The Dullard
23rd Jul 2021 14:10

E-bikes are intended to be pedalled, with the assistance, when needed, of an electric motor. This still means that they are considered human propelled, rather than mechanically propelled.

Please understand that the so-called cycle to work scheme is just the combination of s 244 and salary sacrifice, in order to recoup the cost from the employee, having regard to consumer credit regulations.

For an owner-manager they don't need to "set up a scheme", because they're not looking to recoup the cost from the individual. Buy the bike in the company, claim VAT, claim CAs. If the owner-manager wants personal ownership later on, it can be transferred to him, subject to HMRC's matrix on residual values, VAT and probably a balancing charge.

The whole thread is a load of piffle about something that really isn't very hard at all.

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Replying to The Dullard:
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By atleastisoundknowledgable...
23rd Jul 2021 14:28

Surely BiK arises if there’s no scheme?

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Replying to atleastisoundknowledgable...:
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By Hugo Fair
23rd Jul 2021 15:08

No! See ... ITEPA 2003 s244 ... no mention of Cycle2Work or indeed Salary Sacrifice, just a straightforward "No liability to income tax arises in respect of the provision for an employee of a cycle or cyclist’s safety equipment if conditions A to C are met."

There ARE reasons where the scheme may be desirable for a larger employer - such as a) being able to recoup the costs from employees, and b) not wanting to offer free bikes to every employee. But in what sounds like an owner/director company these are unlikely to warrant the effort of applying the 'scheme'.

Note: In either option the same caveat applies that "the employee uses the cycle or equipment in question mainly for qualifying journeys."

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Replying to atleastisoundknowledgable...:
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By The Dullard
23rd Jul 2021 15:09

No it doesn't. Hopefully if I say this slowly and loudly enough, perhaps you'll finally understand.

T H E " S C H E M E " R E L I E S ON T H E E X E M P T I O N I N I T E P A 2 0 0 3, S 2 4 4 . T H E E X E M P T I O N I S S T I L L T H E R E , E V E N W I T H O U T A " S C H E M E " !

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By atleastisoundknowledgable...
23rd Jul 2021 15:16

Consider it finally understood.

... thanks ... [**blushes**]

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Replying to The Dullard:
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By Leywood
26th Jul 2021 11:44

Channelling PNL there Dulls. Like a blast from the past.

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Replying to Leywood:
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By Tax Dragon
26th Jul 2021 13:06

ALISK has a way of bringing out the best in people.

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Replying to Tax Dragon:
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By atleastisoundknowledgable...
26th Jul 2021 13:13

Tax Dragon wrote:

ALISK has a way of bringing out the best in people.

Why thank you [*takes a low bow*]

Is it my scintillating conversation or 'talent' for tax?

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Replying to Leywood:
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By Tax Dragon
26th Jul 2021 13:08

Btw, (if it's not a personal question) who are you channelling? Leywood isn't old enough to know PNL personally.

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By Tax Dragon
23rd Jul 2021 15:49

Hugo Fair wrote:

Does the e-motor make it a motor vehicle?

That was actually the question asked, before the big pot of confusion got stirred. (And the RTA definitions were among the interpretive provisions I had in mind above.)

I'm not 100% convinced that Dulls's response about pedal-power ties in with the RTA definitions. But I don't know that it doesn't.

Maybe it's a van?

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Replying to Tax Dragon:
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By Hugo Fair
23rd Jul 2021 16:16

I'm not remotely qualified (even by my usual 'have a go' standards) to adjudicate on the status of an e-bike amongst the options of cycles, motor vehicles and no doubt countless other types of mode of transport.

But ... I am dubious of Dull's assertion that "E-bikes are intended to be pedalled, with the assistance, when needed, of an electric motor." All the googling I can face keeps describing them the other way round - i.e. "Do you still have to pedal an electric bike? Even for e-bikes that have a throttle, you'll need to pedal when going up long, steep hills, although you won't have to pedal hard."

In other words, an e-bike is an under-powered motorised two-wheel vehicle that provides the driver with an option of adding-in human power via pedalling (a bit like turbo in a car).

Pick the bones out of that one!

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Replying to Hugo Fair:
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By Tax Dragon
23rd Jul 2021 16:43

Commentary says an e-bike is a cycle within RTA. It doesn't justify the assertion, but I can't see either HMRC or accountants taking issue with it. (And maybe that's why they don't need number plates?)

I would just say that, much as I've enjoyed the laughter at ALISK's expense (and yes I almost posted the "to you Baldrick, the Renaissance was just something that happened to other people" clip), the idea of having a "scheme" isn't quite as daft as it might have sounded. Condition C is that cycles are available generally to employees of the employer concerned. If there's only one of you, how do you demonstrate that the company has a policy of making cycles generally available? Some advisors might suggest that you set up a "scheme"....

[Don't know what it is, but I fancy some beans for my evening meal.]

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Replying to Tax Dragon:
ALISK
By atleastisoundknowledgable...
23rd Jul 2021 16:54

Tax Dragon wrote:

… much as I've enjoyed the laughter at ALISK's expense … the idea of having a "scheme" isn't quite as daft as it might have sounded.

Glad I provided today’s entertainment, even if some didn’t seem to think I was being sooo stupid. :)

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Replying to Tax Dragon:
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By The Dullard
23rd Jul 2021 20:09

On the availability to employees of the employer generally point, they don't need to be available on the same terms. If there's a second-hand pool bike that nobody uses, then it's the choice of the employees not to use it. The fact it hasn't got a saddle isn't relevant.

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Replying to The Dullard:
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By Tax Dragon
23rd Jul 2021 20:37

Well... I think for a one person company, the "all employee" test in s244 frankly doesn't merit talk of "scheme". I made the point because other all-employee tests may be more, erm, testing. And I have heard much better tax brains than me suggest "scheme" in some such situations.

Btw I wouldn't want to push your saddleless bike theory too far. If Mr Tesco, say, was provided with a £6k e-bike whilst the other 400k staff (or however many it is) shared a pool bike, I don't think a tribunal would agree that cycles were generally available to employees of the employer.

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Replying to Tax Dragon:
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By atleastisoundknowledgable...
23rd Jul 2021 20:55

in this case, it’s not a one-person company, there are about 10 employees in addition to our director/shareholder and his wife who is also a director/shareholder

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Replying to atleastisoundknowledgable...:
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By Hugo Fair
23rd Jul 2021 21:17

Hmmm ... when combined with your earlier comment "Client to use for regular commuting & the occasional trip to a supplier (Booker / Makro etc)", I'm less convinced that ITEPA 2003 s244 will get your client where he/she wants to be.

If you haven't already, read conditions B & C:
(3) Condition B is that the employee uses the cycle or equipment in question mainly for qualifying journeys.
(4) Condition C is that cycles are available generally to employees of the employer concerned or, as the case may be, cyclist’s safety equipment is so available to them.

I keep meaning to give up this thread, but like an addict find myself returning!

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Replying to Tax Dragon:
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By Wanderer
23rd Jul 2021 16:58

An electrically assisted pedal cycle which complies with the GB EAPC classification is a qualifying cycle under Section 192(1) RTA 1988 so accords with S244(5) of ITEPA 2003. (Basically pedals, 250W continuous rated power, electrical assistance cuts out at 15.5 m.p.h. + some marginal others.)
Anybody who's never ridden one I strongly advise to go out & try / buy one. Absolutely brilliant.

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Replying to Wanderer:
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By Tax Dragon
23rd Jul 2021 17:01

The Electrically Assisted Pedal Cycles Regulations 1983 as amended by The Electrically Assisted Pedal Cycles (Amendment) Regulations 2015.

Thanks.

That increase from 15 mph to 15.5... presumably it could actually say 25 kph. Are miles defined in UK law but kms not so? How did the EU let us get away with that?

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Replying to Wanderer:
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By Hugo Fair
23rd Jul 2021 17:05

Yeah but, no but, yeah… I believe an "electrically assisted pedal cycle" is not the same beast as an "e-bike"?

As already admitted, I know nothing about two-wheeler transport types - but with all the e-bike specs I can find, electrical power doesn't cut out until at least 20 mph (and even then that is user modifiable).
And they don't refer to electrical assistance ... the 'positioning' is definitely as transport that requires no pedalling other than in specific circumstances (going up steep hill or racing cars at lights)!

Anyway, I'm out ... before I have to go out and buy one to find out more.

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Replying to Hugo Fair:
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By Wanderer
23rd Jul 2021 17:21

Hugo Fair wrote:

Yeah but, no but, yeah… I believe an "electrically assisted pedal cycle" is not the same beast as an "e-bike"?

The terminology is often mixed up and confused by the public, a bit like tax. What I can tell you is the vast majority of e-bikes sold in the UK are EAPCs. Also all EAPCs are e-bikes but not all e-bikes are EAPCs.

All EAPCs need pedaling (bar the few GB only twist & go exemptions).
https://www.gov.uk/government/publications/electrically-assisted-pedal-c...

As for your last sentence go out & do it, buy a decent one (if you can get one, demand far outstrips supply at present). You won't regret it.

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Replying to Hugo Fair:
By Duggimon
26th Jul 2021 10:36

An e-bike could only fail to be a cycle if it was a motor vehicle. If it was a motor vehicle it could only be a motor cycle. If it was a motor cycle it would require a licence plate, road tax and MOT.

It does not therefore it is a cycle.

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Replying to Duggimon:
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By Tax Dragon
26th Jul 2021 10:45

Duggimon wrote:

If it was a motor vehicle it could only be a motor cycle.

I don't know that that is true.

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