# The Death of Cycle to Work?



## RRCC (16 Apr 2010)

Posted on our BUG board:



> The next purchase window, due April, is being postponed for a few weeks.
> This is because Personnel are having to work on new proposals from HM Customs and Revenue.
> For those currently in the cycle purchase, salary sacrifice scheme there are no changes, but for the future HMRC are proposing some marked changes which are disappointing, fiddlesome and most likely a strong disincentive to buying bikes under this system. HMRC are proposing changes to the final transfer of ownership bit. At the moment, it involves a one-off payment of £20 or 3% of the initial loan. For the future, HMRC want owners to make a statement as to the condition of their bike after the 18 months (this will either be 'good', 'fair', or 'poor'). The information would have to be collated by [employer] and sent back to [scheme operater] who would then ask Halfords or whoever to value the bike on that basis. So for example, a bike initially purchased for £1000 might end up being valued at £500. Clearly this is subjective, open to abuse, confrontation etc. Also, people would be entering a contract without knowing what the final purchase price might be, although it would be easy to imagine it being greater than £20 or 3%. It flies in the face of incentives to try to get more people cycling to work and clearly there's a huge number of very negative things about it all.



If this happens the reduced tax savings and increased operating costs will kill the scheme.


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## Sailorchick (16 Apr 2010)

Glad I got my voucher just in time then. Voucher arrived 2 days ago, picking up new bike next Friday.


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## Jezston (16 Apr 2010)

These are just proposals. I expect when it is shown it would be stupid and unenforceable, they'll drop the idea.


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## PK99 (16 Apr 2010)

RRCC said:


> Posted on our BUG board:
> If this happens the reduced tax savings and increased operating costs will kill the scheme.




Looks like HMRC have cottoned on to the fact that large numbers of people have been buying extra bikes or bikes that never see a journey to work.

I know of people who openly talk about having had several and what a "good earner" it was, and others turning up on club runs on their £1000 carbon bike-scheme steed while using their old hack bike for commuting.

As so often with such things, abuse by people for whom the scheme was not intended destroys the benefit to those for whom it was.


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## addictfreak (16 Apr 2010)

Sadly I believe ours will close to. But not because of rule changes. It would seem that our H&S officer is concerned about the amount of cycling related injuries.
Its hard to check his claims as our workforce are spread across around 20 locations. But I have to say I have not heard of any unusual increase in accident or injury.


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## 2Loose (16 Apr 2010)

Jezston said:


> I expect when it is shown it would be stupid and unenforceable, they'll drop the idea.



Unfortunately this never stopped them before.


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## summerdays (16 Apr 2010)

addictfreak said:


> Sadly I believe ours will close to. But not because of rule changes. It would seem that our H&S officer is concerned about the amount of cycling related injuries.
> Its hard to check his claims as our workforce are spread across around 20 locations. But I have to say I have not heard of any unusual increase in accident or injury.



Surely the injury rate will continue at approximately the same rate with or without the scheme.


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## Vidor06 (16 Apr 2010)

I work for a Government Department in NI and Cycle to Work has only been trialled in one other Dept so far. So I have been waiting patiently for the trial to be rolled out to the others but it looks like it will never happen now.


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## Norm (16 Apr 2010)

Would anyone care to venture what the changes are between this and the current legal requirements?


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## chillyuk (16 Apr 2010)

Strikes me that the scheme has pushed up prices as people have more spending power thanks to the scheme. The same has happened with vets. As more people have insurance so the vets are happy to increase their prices, assuming the insuance company will cough up. Back to the bikes, cycling is moving out of the reach of many people. Hundreds of pounds for very basic bike, over a grand for something half way decent. I know many will disagree, but I think it is just a rip off. As long as people with more money than sense go waving their wallets around so the prices will continue to rise. We need some consumer resistance, but that's not British is it?


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## karlos_the_jackal (16 Apr 2010)

aarrrghh annoying expecting my company to start the scheme this month, was wondering why they weren't giving a definite date.


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## ACS (16 Apr 2010)

I have spoken at length with our Dir of Finance about the companies C2W scheme and the impact the HMRC proposals are going to have. He and the MD are very pro C2W althrough neither have taken up the opportunity to convert from running to cycling. The company had showers installed and allow us to use space for secure bike storage.

The Dir of Finance has stated that he has seen a substantial change in HMRC's attitude towards businesses, charities, taxation and all other associated matters. I quote "They have become real money grabbing b@st@rds" HMRC where always money grabbing but they appear to be focused on closing every loophole they can find and HMRC view is the C2W scheme as just that, another tax avoidance scheme.

It matters not that the scheme promotes health, helps the enviroment, ensures that small business can survive HMRC are only concerned in recovering the revenue lost. 

Our Dir of Finance has already suspended the scheme until further notice and given the HMRC's proposal I have to support his action.


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## GrumpyGregry (16 Apr 2010)

RRCC said:


> If this happens the reduced tax savings and increased operating costs will kill the scheme.





> Also, people would be entering a contract without knowing what the final purchase price might be, although it would be easy to imagine it being greater than £20 or 3%.



It is illegal under the terms of the scheme to know what the final figure will be in advance. If you know what you are going to have to pay in settlement at the end then it isn't a hire agreement in law it is a contract to purchase and, as such, does not qualify for tax relief or remission of NI.


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## viniga (16 Apr 2010)

Can anyone post links to sources? My google fu seems weak.

My company are just thinking of adopting the scheme.


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## ACS (16 Apr 2010)

Viniga 

This may help


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## Norm (16 Apr 2010)

Norm said:


> Would anyone care to venture what the changes are between this and the current legal requirements?


As the subtlety is obviously too much for some, I'll answer myself that the only bit which might be considered a change is the third party valuation.

Everything else in that OP's post is already part of the legislation / regulations.

The myths and BS around this scheme are just amazing. Funny to see people complain about the uncertainty of the final price when, as Greg points out, such knowledge would make the whole scheme illegal.


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## John the Monkey (16 Apr 2010)

Jezston said:


> These are just proposals. I expect when it is shown it would be stupid and unenforceable, they'll drop the idea.


Ever worked in the Civil Service, Jezston?


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## Jezston (16 Apr 2010)

I have actually  (worked for the QCA and CPS in the past, and have a junior embassador in the family)

And of course they've come up with some absurd stuff before, but the entire public sector isn't quite a mad hatter's tea party with everyone pushing through only the most ridiculous regulation. I'm sure some bad ideas don't make it to the light of day!


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## jonny jeez (16 Apr 2010)

Jezston said:


> I have actually  (worked for the QCA and CPS in the past, and have a junior embassador in the family)



SLAM DUNK!! ha ha...sorry had to giggle at that reply.

PS, does you're junior eambassador ever spoil you with nutella (as apposed to fully grown up Ferrero Rocher)


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## BigSteev (16 Apr 2010)

So, if you look after your bike, clean it, service it etc you could end up with it costing more than if you'd just bought it normally. And, conversely, trash the thing totally and it'll cost you less. Great plan from the money grabbing twats.


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## Brains (16 Apr 2010)

Sounds to me like the daily rentabale value of a totally trashed Halfords bike has just gone up !

I rent you a totally trashed, run over by a steam roller, Halfords Bike
Bike gets valued at minimum value of 3% or £20
You keep your £1,000 carbon road bike
You pay me £50 for the day (I'll even chuck in collection and delivery)

Simples!

Please contact me at Loopholes-Bike-Rental.com just as soon as I have a shop


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## addictfreak (16 Apr 2010)

summerdays said:


> Surely the injury rate will continue at approximately the same rate with or without the scheme.



I think his theory is that people will stop cycling over a period of time.

But he is not the brightest of guys.


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## marinyork (16 Apr 2010)

Does C2W make a big difference? Genuine question. I've seen people present stuff on travel plan stuff before and in my experience people can spin stuff a bit.


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## Norm (16 Apr 2010)

marinyork said:


> Does C2W make a big difference? Genuine question. I've seen people present stuff on travel plan stuff before and in my experience people can spin stuff a bit.


Yes. The way that it was working, you "give up" an amount of salary equivalent to the purchase price to hire the bike over a fixed contract period. The benefit is that the salary sacrificed is not subject to tax or NI. There are many possible trip-ups, though. The rules have always required you to pay a realistic valuation at the end of the hire period.

If the HMRC are going to *enforce the rules as they have always been implemented, *all that is required is to change the scheme rules so that you don't pay the full purchase price as rental. This will, of course, reduce the amount of tax saved but I guess sheeple would much rather pick up BS and rumours which allow them to bleat on about the nasty tax man than figure out what the regulations actually say.


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## marinyork (16 Apr 2010)

No I know all that Norm. I mean in terms of people actually taking up cycling/cycling more often through it. I obviously think the scheme should continue, my point was rather like PK99's in that I can see the bureaucrat/taxman's point of view (don't agree with it). The point I was making was that fairly generous benefits/tax benefits are offered to people in the penny pincher's vocabulary 'who don't really need it'.

The only person I've ever met who doesn't cycle and might do and encouraged to through the scheme is on an extremely generous salary. She doesn't 'need' the scheme at all in some financial senses but of course the ease and spread of payments is very tempting. Other people I've known who have taken advantage of the scheme have actually increased the number of times they cycle to work, again on pretty beefy salaries.


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## Norm (16 Apr 2010)

Ah, right. Well, after I joined the scheme, I only had a chance to cycle once on the scheme but I did it then got made redundant.


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## Chrisc (16 Apr 2010)

They are quietly killing it already. Ours never got off the ground after the Novemeber 09 changes came in making it a requirement that the scheme be open to ALL employees, even if they only work one hour a year. Now impossible to administer was our HR response. These schemes are closing hand over fist.


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## Norm (16 Apr 2010)

Chrisc said:


> They are quietly killing it already. Ours never got off the ground after the Novemeber 09 changes came in making it a requirement that the scheme be open to ALL employees...


Which is yet another one which wasn't a change.


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## Matty (16 Apr 2010)

I don't actually think the scheme is that amazing. I'm on it now, but reckon I'd be best not bothering next time round (to get a road bike). Savings are not huge compared to getting 'last year model' bike from t'internet.


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## JtB (16 Apr 2010)

PK99 said:


> Looks like HMRC have cottoned on to the fact that large numbers of people have been buying extra bikes or bikes that never see a journey to work.
> 
> I know of people who openly talk about having had several and what a "good earner" it was, and others turning up on club runs on their £1000 carbon bike-scheme steed while using their old hack bike for commuting.
> 
> As so often with such things, abuse by people for whom the scheme was not intended destroys the benefit to those for whom it was.


Now I know why there's not a single decent bike in the bike shed where I work even though the C2W scheme has been running for years. TBH, that's one of the main reasons stopping me from getting a decent bike, because at least I can leave my old racer there and it doesn't stand out from the crowd.


Matty said:


> I don't actually think the scheme is that amazing. I'm on it now, but reckon I'd be best not bothering next time round (to get a road bike). Savings are not huge compared to getting 'last year model' bike from t'internet.


Can you not buy off the internet with C2W?


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## John the Monkey (16 Apr 2010)

Jezston said:


> And of course they've come up with some absurd stuff before, but the entire public sector isn't quite a mad hatter's tea party with everyone pushing through only the most ridiculous regulation. I'm sure some bad ideas don't make it to the light of day!


I worked in the DfEE for a time.

We had good people, but some who gave every impression of being absolutely bonkers.


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## 2Loose (16 Apr 2010)

My concerns with this are that depending on how the end price valuation would work, you could easily end up paying far more for the bike over the year than full list price. 

The most bizarre bit was the insinuation that If you look after the bike well, the end payment could be 30+% which would make the yearly total quite a lot more expensive than just paying shop price on a credit card to spread the payments in the first place. 
But trash the bike and it would still be a good deal. ???? 

Norm's suggestion of altering it so that the rental is not the full price in the first place would be a logical change, but it would be hard to calculate in advance, based on the final condition of the bike, or have I got that wrong.


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## Black knight (17 Apr 2010)

Hmm, intersting thread.

I just got an email from my HR a couple of days ago saying our scheme is due to start on 3rd May.
I'll have to have a good look through the small print before I commit.

I wonder what criteria Halfrauds will base their valuation on.


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## summerdays (17 Apr 2010)

marinyork said:


> Does C2W make a big difference? Genuine question. I've seen people present stuff on travel plan stuff before and in my experience people can spin stuff a bit.



I've known someone who was cycling to work but who only ever bought really really cheap bikes - £20 was his limit, and they were usually already in a fairly sorry state and he would run them totally into the ground and every thing from gears to bottom brackets would fail, leaving him walking home. He then bought a £1000 bike under the scheme and so much enjoyed the difference that he then bought the rest of his family good bikes over the next year. The whole family now cycle whereas in the past the bike was just an object.

Mr Summerdays didn't cycle to work until after he bought a bike through the scheme - although he bought it thinking he might occasionally cycle instead of driving, and then decided he would just for the summer and now is a fully converted to cycling through rain, snow, wind and ice.


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## gb155 (17 Apr 2010)

RRCC said:


> Posted on our BUG board:
> 
> 
> 
> If this happens the reduced tax savings and increased operating costs will kill the scheme.



bugger mines up in June


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## Tynan (17 Apr 2010)

It seems to be me like tax payers money gets used to buy people extra bikes

so good riddance, not like there aren't better uses for tax payers' money


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## psmiffy (17 Apr 2010)

I am afraid that I think the scheme is brilliant - I was the only cyclist at our place when the scheme was enacted a fair number of people used it - I was very sceptical that people would actually cycle to work - only one person did not start to ride to work on a regular basis -I was competing for parking


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## addictfreak (17 Apr 2010)

psmiffy said:


> I am afraid that I think the scheme is brilliant - I was the only cyclist at our place when the scheme was enacted a fair number of people used it - I was very sceptical that people would actually cycle to work - only one person did not start to ride to work on a regular basis -I was competing for parking



I have to say its made a big difference in my job too. Many people taking up all kinds of cycling. Most would never have bothered without cycle to work.


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## Downward (17 Apr 2010)

marinyork said:


> Does C2W make a big difference? Genuine question. I've seen people present stuff on travel plan stuff before and in my experience people can spin stuff a bit.



I only got back into Cycling because of cyclescheme so it worked for 1 person at least !


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## Downward (17 Apr 2010)

PK99 said:


> Looks like HMRC have cottoned on to the fact that large numbers of people have been buying extra bikes or bikes that never see a journey to work.
> 
> I know of people who openly talk about having had several and what a "good earner" it was, and others turning up on club runs on their £1000 carbon bike-scheme steed while using their old hack bike for commuting.
> 
> As so often with such things, abuse by people for whom the scheme was not intended destroys the benefit to those for whom it was.



Yes this is erm very common at work, As mentioned before you don't see many shiny new bikes at our work.
For me commuting is 80 to 90% of my cycling so using the best bike just for weekends is a waste.


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## Downward (17 Apr 2010)

2Loose said:


> My concerns with this are that depending on how the end price valuation would work, you could easily end up paying far more for the bike over the year than full list price.
> 
> The most bizarre bit was the insinuation that If you look after the bike well, the end payment could be 30+% which would make the yearly total quite a lot more expensive than just paying shop price on a credit card to spread the payments in the first place.
> But trash the bike and it would still be a good deal. ????
> ...



Although I went to LBS for an 09 bike and got a quote for this (The 2010 models were not out for a few weeks) so the bike that I got the voucher for ain't the bike hanging on my wall. Work said it's fine and have never asked me what actual bike I bought.


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## marinyork (18 Apr 2010)

Downward said:


> I only got back into Cycling because of cyclescheme so it worked for 1 person at least !



Well it's good to hear it works for some like you and Mr Summerdays. I know the potential is there but of course so many companies don't offer it or people don't know about it.


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## J4CKO (18 Apr 2010)

Glad I got a second one in before it all starts disintegrating, it's a shame and I cant imagine it costs the government that much, difficult to put a price on though, very complicated, the health benefits and resultant lowering of demand on the NHS etc.


I could do without people buying full suspension mountain bikes on the scheme and just keeping them in the garage, out of perhaps ten bikes in our dept I am the only one who has actually cycled to work.


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## Browser (18 Apr 2010)

Hrrmm, just read through the rules on the Cyclescheme webpage and the appropriate page of the hire agreement sent to me by my employer, and it does rather look like my nice, low-priced bike might turn out not to be after all, depending upon how good my employer decides to be after the hire period is up (on our scheme that's 36 months). Assuming I take good care of it, anyone got any idea how much a three-year-old Tifosi CK7 is likely to be worth?


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## Browser (18 Apr 2010)

Yup, the more I read about this, the more I can't help thinking that I've dropped a collosal clanger (which I seem to do each and every time I have anything to do with dealings financial). Reading more of the dreaded small print on the Cyclescheme website, it states that "Many employers opt for Cyclescheme to take ownership of the bikes at the end of the hire term, in which case any offer sale to the employee will come directly from Cyclescheme", who I can't see saying "oh it's OK mate, have it for a fiver". somehow.
One of these days, I'll learn to read the small print first before I commit, and will also pratice what I preach to others, i.e. 'if it looks too good to be true, it usually IS!'.


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## Rhythm Thief (18 Apr 2010)

I can't imagine ever buying a new bike under any circumstances. Where's the fun in that?


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## Browser (18 Apr 2010)

Norm said:


> If the HMRC are going to *enforce the rules as they have always been implemented, *all that is required is to change the scheme rules so that you don't pay the full purchase price as rental.



Wouldn't thsi fall foul of the whole it's-hire-not-purchase business which is contained within the current rules i.e. they can't discuss or fix the Fair Market Value before or during the hire period as this would constitute it being a sale and render it inelegible for the tax & NI exemption? To make sure you were getting the bike at the purchase price by reducing the monthly payments you'd need to know the transfer fee.
Does anyone have examples of what participating companies have been charging up until now?


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## Norm (18 Apr 2010)

Great, now someone who admits they didn't read their own scheme's rules is telling me about the Cycle to Work regs. 



Browser said:


> Wouldn't thsi fall foul of the whole it's-hire-not-purchase business which is contained within the current rules...


WTF was that about, Browser? I was talking about reducing the amount paid in the rentals, not fixing the final payment price. Methinks it's some of the large print as well as the small that you are missing.

Does your employer use Cyclescheme? Have they made an agreement with Cyclescheme to buy the bikes at the end of the hire period? Are you always such a pessimist or are you making a special effort with this one?


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## Riverman (18 Apr 2010)

Supposing this is a major change, any ideas when it's likely to come into force?

A short time after the next general election?


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## gb155 (18 Apr 2010)

Riverman said:


> Supposing this is a major change, any ideas when it's likely to come into force?
> 
> *A short time after the next general election?*



dammm you beat me to it, lol


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## Browser (18 Apr 2010)

Norm said:


> Great, now someone who admits they didn't read their own scheme's rules is telling me about the Cycle to Work regs.



No, not telling you Norm, discussing, there's a difference, hence me saying "wouldn't this" rather than "this would" at the beginning of the post . Believe me, I don't usually try to tell anyone about any regs anywhere, as my grasp of them is generally tenuous at best. Believe me, I wish I was different, I only hope involvement in this scheme helps to make me so!




Norm said:


> WTF was that about, Browser? I was talking about reducing the amount paid in the rentals, not fixing the final payment price. Methinks it's some of the large print as well as the small that you are missing.



I was under the impression what was under discussion was the fact that, if HMRC were going to strictly enforce the existing regs, the end cost of the bike to the cycleschemer could increase substantially, as many scheme operators (employers) had up until now only charged a nominal fee to transfer ownership of the bicycle from the hirer to the hiree. Payment of 'Fair Market Value' would obviously increase this, so my impresion was that you were suggesting the sum total of the amounts paid per month should be made be less than the total purchase cost of the bike/value of the Cyclescheme voucher, so that when said FMV was paid to transfer ownership, this would bring thr total paid up to the full purchase price. Or have I grasped copmpletely the wrong end of the wooden plant support?



Norm said:


> Does your employer use Cyclescheme?



Yes.



Norm said:


> Have they made an agreement with Cyclescheme to buy the bikes at the end of the hire period?



Without checking the agreement, which is in PDF form at work (to be rectified tonight) I don't know but I believe it said words to the effect "the hirer may wish to transfer ownership at the end of the hire term" and then went on to state that this would be an entirely separate agreement than the salary sacrifice one set up for the 'hire' of the bike, i.e. 'don't blame us if you pay half as much again at the end'.



Norm said:


> Are you always such a pessimist or are you making a special effort with this one?



YES!!!! And it's not pessimism, it's pragmatic realism , combined with abiding by the Murphys Law school of thought. You tend to get less disappointed by life that way


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## Downward (18 Apr 2010)

To asses the Fair Market Value they would have to hire someone qualified enough to do this and it would be interesting to see how this person would go about his job !

I know if someone said to me we are looking to inspect your bike I'd say I can do Sunday evenings only and lets face it this job would be a 9-5 job. Other choice inspect it at work - Sorry I am on my other bike today !


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## Browser (18 Apr 2010)

I'd make sure I scheduled it for when I was on night shifts.


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## gb155 (18 Apr 2010)

Browser said:


> I'd make sure I scheduled it for when I was on night shifts.



id start working night shifts lol


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## Norm (18 Apr 2010)

Browser said:


> YES!!!! And it's not pessimism, it's pragmatic realism , combined with abiding by the Murphys Law school of thought. You tend to get less disappointed by life that way


Indeed... life sucks when the worst you can be is right. 



Browser said:


> I was under the impression what was under discussion was the fact that, if HMRC were going to strictly enforce the existing regs, the end cost of the bike to the cycleschemer could increase substantially, as many scheme operators (employers) had up until now only charged a nominal fee to transfer ownership of the bicycle from the hirer to the hiree.


Ah, could have been me misunderstanding your point because I was reading before drinking my first coffee on a Sunday morning. 

Yes, your understanding above is correct, that's what I was suggesting. The "nominal fee" has always been in breach of the regulations, Mr Taxman is just asking the hirers to confirm how they arrived at fair market value. If the scheme is set up to cover the bikes true value at the end of the rental period, the monthly deductions will be less but the purchase price will be higher. As the purchase is made out of taxed earnings, this will reduce (but not eliminate) the benefits of the scheme.

The problem comes in the transition, with peeps like yourself who have been paying the equivalent of the original purchase price through the rentals.


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## Browser (18 Apr 2010)

Norm said:


> Ah, could have been me misunderstanding your point because I was reading before drinking my first coffee on a Sunday morning.



Probably not Norm, I'm never very coherent at four in the morning, so my posts from the same time are likely not to be either 



Norm said:


> Yes, your understanding above is correct, that's what I was suggesting. The "nominal fee" has always been in breach of the regulations, Mr Taxman is just asking the hirers to confirm how they arrived at fair market value. If the scheme is set up to cover the bikes true value at the end of the rental period, the monthly deductions will be less but the purchase price will be higher. As the purchase is made out of taxed earnings, this will reduce (but not eliminate) the benefits of the scheme.
> 
> The problem comes in the transition, with peeps like yourself who have been paying the equivalent of the original purchase price through the rentals.



The annoying thing is, I've not actually started paying yet, but my application for the certificate (voucher) has been accepted and, worse, I've given Fat Birds Don't Fly a £200 deposit from my credit card, which I strongly suspect won't be refundable, so hoist by myne own petard am I.
Re-reading the information, I strongly suspect that even those who've already got their bike and have been in the scheme for nigh on three years will get caught, as our agreement clearly states:

"The Selection may be transferred to you at the end of the term of this Hire Agreement for a nominal sum, equating to fair market value at that time (including VAT)."

How the hell Fair Market value can equate to a 'nominal sum' for a £900 bike is beyond me. One strongly suspects that much of this scheme's administration, including the addition of the above wording, was put in by non-cyclists with no clue as to a decent bicycles second-hand value.


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## Debian (18 Apr 2010)

Hmm...

This sounds like what my HR dept was trying to explain when they told me why they wouldn't implement the scheme.

Their argument boiled down to a) to difficult to administer, especially when it came down to assessing fair market value at the end of the contract and  they thought it wasn't a sensible scheme because hirers would end up paying more than the full RRP of the bike once the final transfer payment was taken into account.

Makes more sense now.

I do think there should be more control of the use of the bike. If taxpayers are contributing to others purchasing bikes on a _cycle to work_ scheme then the bike so purchased should be used to.... errr..... _cycle to work_ and any private use of the bike should be treated as a benefit in kind and taxed accordingly.


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## Riding in Circles (18 Apr 2010)

Unfortunately it will only be a matter of time before the tax man kills the benefits of the scheme, it is the way of things, Mr. taxman only turns a blind eye for so long and does not like the idea of people getting fringe benefits.


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## PK99 (18 Apr 2010)

satans budgie said:


> HMRC where always money grabbing but they appear to be focused on closing every loophole they can find and HMRC view is the C2W scheme as just that, another tax avoidance scheme.
> 
> It matters not that the scheme promotes health, helps the enviroment, ensures that small business can survive HMRC are only concerned in recovering the revenue lost.
> 
> Our Dir of Finance has already suspended the scheme until further notice and given the HMRC's proposal I have to support his action.



no doubt HMRC will have a breakdown of the types and numbers of bikes bough on the scheme.
Carbon fibre race machines vs commuters

The objective of the scheme was to encourage new cycle commuters, not finance the weekend cycling of regular cyclists. My observation of the people i kow who have bought on the scheme is that the vast majority fall into the latter category.

My LBS encouraged me to finance a new van nicholas through the scheme - as self employed the tax benefits are apparently even better. I work from home.


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## GrasB (18 Apr 2010)

The scheme reportedly is to make cycling into work financially attractive. If the scheme is set up so long term the person is likely to be worse off then the scheme should be scrapped upfront.

I think trying to stop people buying 2 grand weekend bikes is pointless & also since C2W was available in our department via personnel there has been an increase in rather nice high end hybrids & decent road bikes in the bike sheds. So a lot of those carbon road bikes from my POV are making it into work. I think it would be better to ask people to keep a log of which days they cycled in & say ask them to cycle in 1 day out of 5 (or around 50 days in the year for someone working a 5 day working week) as a minimum.

There is also the question of is what is the actual target of this scheme? I know of around 10 people who started cycling into work rather than driving because they could afford to buy a 'best bike'. Sure the bike purchased on the C2W scheme never made it to their work place but the bike they previously used at weekends does, surely that's mission accomplished?


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## Norm (18 Apr 2010)

PK99 said:


> no doubt HMRC will have a breakdown of the types and numbers of bikes bough on the scheme.
> Carbon fibre race machines vs commuters


I don't think that they'd have a full analysis. Whilst the large intermediaries, such as CycleScheme, will probably keep and provide details, they will have no way of gathering information about some of the purchases made.



GrasB said:


> I think trying to stop people buying 2 grand weekend bikes is pointless


You _shouldn't_ be able to but a £2k bike on the scheme as it is currently set up, unless your employer already has a credit licence. One of the reasons that I like the current £1k limit is that it allows a decent "commuter" bike for those who do cycle for some distance. If the limit was, say, £200, you'd struggle to get a scoot you'd want to ride daily on a 20 mile commute.


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## GrasB (18 Apr 2010)

Norm said:


> You _shouldn't_ be able to but a £2k bike on the scheme as it is currently set up, unless your employer already has a credit licence.


The scheme allows for a 2k budget, sure your employer may not allow you to go over 1k (mine does) but C2W allows for 2k. Lets face it even at 1k you can still get a decent road bike that'd be a useful tool in a race.


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## Norm (18 Apr 2010)

Do you want to point out where the scheme sets that budget limit?

I'll help you by posting (yet again) the wording from the DfT's guidance notes...


> *3. What value of equipment can be supplied?*
> There is no limit on the total value of the equipment including the cycle. It is possible to loan two cycles to one employee if, for example, that employee needed a cycle at either end of a train journey between their home and place of work. (However, please see Section 9.1 where the Office of Fair Trading (OFT) has advised that the group consumer credit licence will cover schemes up to a value of £1,000.)


And 


> *9.1 Consumer Credit Licence*
> Any employer entering into the scheme will need the cover of a consumer credit licence. In order to facilitate the scheme the OFT has issued a group consumer credit licence designed to cover employers setting up Cycle to Work schemes so that employers need not apply individually for credit licences for this purpose. Employers will be covered by the group licence so long as they are undertaking activities within its terms. The group licence covers only consumer hire business, (not the making of hire-purchase agreements – see below) for the purpose of providing employees with bicycles and or bicycle equipment up to the value of £1000, including VAT and not taking into account any income tax exemption under an employee benefit scheme, that is, the market price the employer pays or seeks to recover from the employee by way of hire charges.
> If employers also undertake regulated business other than that described in the group licence or wish to offer packages in excess of £1000, they will need to obtain a standard licence to cover that business. The Cycle to Work Group Credit Licence can be seen at http://www.oft.gov.uk/Business/licence/group.htm


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## GrasB (18 Apr 2010)

Sorry where did I say the upper limit was 2k? I just mentioned the C2W scheme allows for a 2k budget because that's what our personnel division limits you to, anything over 2k is a registered asset which produces a s**t load of internal paper work, I don't give 2 hoots if another company allows for 100k. The point is you *can* buy a 2 grand bike through C2W & there's very little point in trying to stop people buying weekend bikes. It'd be a much better idea to spec a minimum usage requirement than trying to weed out people who are buying a new best bike.


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## Norm (18 Apr 2010)

GrasB said:


> Sorry where did I say the upper limit was 2k?


That would be the first line of this post...



GrasB said:


> *The scheme allows for a 2k budget*, sure your employer may not allow you to go over 1k (mine does) but C2W allows for 2k.


As I said originally, you can only go over the £1k limit and keep within the rules if you have a consumer credit licence. There are very few companies (banks and other financial institutions) which will have one of those, thus, the £1k blanket limit applies to most and very few can buy a £2k bike on the scheme.


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## GrasB (18 Apr 2010)

I'm still not seeing where I said a 2k *limit*, I said allowed for a 2k budget. There's a difference between allowing for a 2k budget & a spending limit. For instance I could have £10k purchase budget for a years consumables but have spending limit of £50k. Anyway are you deliberately trying to ignore the issue by being pedantic (a task you're managing to fail at btw)? 

The issue is if you have a reasonable spend limit for a good bike people are going to try & use it for their own gains. Now you can put in reasonable minimum requirements but in essence if the scheme is going to make people fundamentally less well off long term then it should be scraped.


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## Browser (18 Apr 2010)

PK99 said:


> The objective of the scheme was to encourage new cycle commuters, not finance the weekend cycling of regular cyclists. My observation of the people i kow who have bought on the scheme is that the vast majority fall into the latter category.



Whilst I fully agree with you, I don't think there are any stipulations or limitations in the regs regarding what type of bike you buy, so if there were such a mentalist out there, they could have blown £750 on one of these . I would imagine that any representative of HMRC would merely say that the subject of this thread was all in the regulations from the start and wasn't applied properly.
I'd like to know why the 5% nominal fee came into being, as it seems awfully suspicious that so many companies seem to have done the same sort of thing independantly from each other. I'd like to hazard a guess that somewhere in the guidance issued to potential scheme members, there was a line about nominal fee or 5% or something, otherwise they knew that people wioth half a brain (that doesn't include me by the way, as Norm has discovered!) would realise that it was another scam purporting to help people and would run a country mile from it.


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## Norm (18 Apr 2010)

GrasB said:


> I'm still not seeing where I said a 2k *limit*, I said allowed for a 2k budget. There's a difference between allowing for a 2k budget & a spending limit.


Not to me there isn't. If someone set a £2k budget, I'd consider that to be the limit of what could be spent. Discussing your ambiguity is semantics, anyway, my point was that the scheme limits you to £2k unless your employer has the appropriate credit licence. I hope that your employer does have the credit licence, BTW, or Mr Taxman isn't going to be very happy.

Anyway, to reiterate, I suggest that, for the vast majority of people, that sets the effective limit at £1k.



GrasB said:


> Anyway are you deliberately trying to ignore the issue by being pedantic (a task you're managing to fail at btw)?


I agree that I did fail to ignore your point, as I addressed it in my first response. I wrote that "_One of the reasons that I like the current £1k limit is that it allows a decent "commuter" bike for those who do cycle for some distance. If the limit was, say, £200, you'd struggle to get a scoot you'd want to ride daily on a 20 mile commute._"


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## currystomper (18 Apr 2010)

Hi 

I brought my folding bike on CtW - If it hadn't been for the scheme I would brought a cheaper folder!! 

As to market value at the end of the hire period - is it the market value to the company (employer) that purchased the bike? - given the paper work and man power time to sell a second hand bike I would have thought that the bike was negative equity to the company. 

What would the company have to do??
1) receive back the bike ( time)
2) store the bike (time and money)
3) service the bike (so they don't get sued for selling shoddy goods!)
4) advertise (time and money)
5) deliver to new owner. 
....doesn't sound like much of a money spinner to me - if it was more cycle shops would sell 2nd hand bikes!!


CS


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## Vikeonabike (20 Apr 2010)

This is probably why Cambridgeshire Constabulary are not running the scheme this year.....mind you after a year of use with very little in the way of maintenace my Paddy wagon is only worth a fiver now....LOL


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## Black knight (14 May 2010)

Anybody had confirmation of how the final value will be determined?
Hoping to join the scheme for the first time this year.

Thanks


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## RRCC (14 May 2010)

Black knight said:


> Anybody had confirmation of how the final value will be determined?
> Hoping to join the scheme for the first time this year.
> 
> Thanks



The latest news from my civil service employer is:



> Apparently, the Treasury is working up a valuation matrix for the final payment, so they (the Treasury) seem to be going ahead with the changes to the cycle purchase scheme. I'm not sure at this stage whether or not [employer] will implement a simple loan scheme - I hope they do


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## jimboalee (14 May 2010)

Our ( Jaguar Land Rover ) C2W scheme never existed.

In about April, the company who market LR liveried bikes have a 'sell off'.

Most bikes are offered at half price.

There is no limit to the number of bikes each employee can purchase, and no minimum limit to the duration of 'first ownership'.

In effect, I could have bought half a dozen bikes and sold them on with a minimal 'administration fee' to CycleChat participants.

Mine is glorious.

The big 'fly in the ointment' is that they are MTBs and need to be 'slicked up' for commuting purposes. This adds £60 immediately.


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## benb (14 May 2010)

Mine has a limit of 1k, but you are allowed to buy two bikes if you want.
The wording on our intranet about it says that the final FMV payment is "generally" set at 2.5%

So who knows?


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## Jezston (14 May 2010)

My employers are getting concerned about this too - it is still very unclear as to WHO does the final valuation. Apparently any shop that is on the scheme (regardless of whether it is the shop you purchased it from) is not allowed to do the valuation, due to potential conflict of interest. They have asked if any member of staff can get some kind of qualification to allow them to do the valuation, but of course there is no qualification on bicycle maintainance.

If the scheme providers themselves do the valuation, there is of course a SERIOUS conflict of interest there! These companies are not non-profit government subsidarys, they are for-profit private companies. What's to stop them saying your £400 bike is now worth £1000 hand over the cash or the bike matey?


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## Downward (14 May 2010)

Hi- We use Cyclescheme at the moment but I know we are looking at changing supplier - Would this be wise given the HMRC stance on the 5% valuation ??
Found this.
A number of the cycle scheme agreements we have seen suggest that at the end of the
hire agreement, the cycle can be sold to the employee for a notional amount. For
example, some documentation seems to imply that even £1,000 worth of cycles and
cycling equipment will have a negligible value after 18 months. This is misleading and
is certainly not a view shared by HMRC. So be warned: there are no special
arrangements or tax concessions covering this eventuality, and normal tax rules apply.
If the employee buys the cycle for less than its market value, the difference is liable to
tax and attracts employer’s Class 1A NICs. HMRC take the view that each cycle must
be valued at the time of sale.


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## GrasB (14 May 2010)

At which point the plug should be pulled as it's very likely you'll end up spending more money for your equipment long term than buying it straight out.


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## 2Loose (14 May 2010)

I sense a boom in knackered drive train parts which will be swapped onto the bike just before valuation, then swapped out again afterwards in an attempt to get the valuation down.


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## Jezston (14 May 2010)

So what happens if, at the end of your scheme, they (whoever 'they' are) turn around and say they want more than you are prepared to pay? What then?

...

Also, in an earlier thread about cycle schemes, someone mentioned something about getting some kind of loan from your employer that may be more favourable in certain circumstances. Anyone know what I'm talking about?


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## hillrep (14 May 2010)

At the end of the hire period (usually 1 year) the bike still belongs to the employer. It is up to them to decide what to do with it, subject to HMRC rules. 

I think one common option is to transfer ownership to the employee at a cost of something like one extra payment, or 5% of the initial price or whatever.

Another possibility which has also been employed in some places is for the payments to stop. The bike then still belongs to the employer, but you can continue to use it and the institutional memory will fade along with the bike's value....

The way the scheme is set up here is a real mess. If the rules are rigidly enforced then there is almost no incentive to buy a bike through the scheme.


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## BenM (14 May 2010)

> turn around and say they want more than you are prepared to pay? What then?


Give them the bike back - I wouldn't want to, but if push came to shove...

B.


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## Black knight (14 May 2010)

What if the bike is stolen?

I know you have to pay your lease payments, but surely the loss of the bike should be covered by the owners insurance.

How would buying the (now non existant) bike go ahead in this case?


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## summerdays (14 May 2010)

Hmm... you could suddenly see a rise in 11 month old bikes being stolen depending on what the answer to your question was.


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## dodgy (14 May 2010)

Buy bike for £1000 on C2W scheme
Pay roughly £50 per month (depending on your tax band)
After 12 months, you've paid £600
You have the bike valued (properly) and it's worth £600
So employer asks for £600
Total cost of a £1000 bike = £1200
hahaha - brilliant  This is one of the reasons why in real life it would never happen, though I stand to be corrected that it has happened to anyone.


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## Downward (14 May 2010)

dodgy said:


> Buy bike for £1000 on C2W scheme
> Pay roughly £50 per month (depending on your tax band)
> After 12 months, you've paid £600
> You have the bike valued (properly) and it's worth £600
> ...



Hmm Cue thousands of Bike Inspectors being trained up ala the Hips house buying thing !

But wait - New Goverment and Spending Cuts ! Can't see them employing anyone but can see them pulling the scheme.


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## dodgy (14 May 2010)

And CycleScheme is a private company isn't it? They had massive growth last year, one of the fastest in business as I understand it. They could go out of business overnight - what a precarious business model they have.


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## DrSquirrel (14 May 2010)

http://www.cyclechat.net/forums/newreply.php?do=newreply&p=1250051

Sorry if someone has already put this.

But reading the implementation guides, companies are not to say that the bike will be available for purchase at the end of the agreement, otherwise it will be considered hire purchase and attract usual taxes.



addictfreak said:


> .... It would seem that our H&S officer is concerned about the amount of cycling related injuries.
> Its hard to check his claims as our workforce are spread across around 20 locations. But I have to say I have not heard of any unusual increase in accident or injury.




I wonder if they even bother to look at car accident statistics?



Browser said:


> Hrrmm, just read through the rules on the Cyclescheme webpage and the appropriate page of the hire agreement sent to me by my employer, and it does rather look like my nice, low-priced bike might turn out not to be after all, depending upon how good my employer decides to be after the hire period is up (on our scheme that's 36 months). Assuming I take good care of it, anyone got any idea how much a three-year-old Tifosi CK7 is likely to be worth?




Cyclescheme will be taking part of the costs.
And you don't *have* to buy it, if you had to buy it it would be a hire purchase scheme and out of the taxation benefit (which can include fines).
Cyclescheme(the company, from what I've heard) get around this by trying to charge a disposable fee.
Ask your company to loan it to you for free for the foreseeable future.




dodgy said:


> And CycleScheme is a private company isn't it? They had massive growth last year, one of the fastest in business as I understand it. They could go out of business overnight - what a precarious business model they have.




Yes it is - and I bet they love the fact that a lot of people cannot tell that - and they like to hide away the true costs to you, your employer and the shop.


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## GrumpyGregry (14 May 2010)

But surely


Buy bike for £1000 on C2W scheme
Pay roughly £50 per month (depending on your tax band)
After 12 months, you've paid £600
You have the bike valued (properly) and it's worth £600
So employer asks for £600
You walk away
You sign up for a new bike starting at 1 again
Employer wonders what the heck to do with all the old bikes they now own.


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## BenM (14 May 2010)

> So employer asks for £600
> You walk away
> You sign up for a new bike starting at 1 again





That's what I was getting at earlier  there is absolutely no compulsion on you to buy the bike.

B.

P.s. interesting that the BBS renumbers things when they are copied and pasted from the original post... sorry geek head on there for a moment


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## dodgy (14 May 2010)

GregCollins said:


> But surely
> 
> 
> Buy bike for £1000 on C2W scheme
> ...



Yes, but you'd be better off buying a bike for £600 in the first place on some kind of interest free deal then at least you've got the depreciated value at the end of it. In your example you're donating £600 worth of bicycle to your employer.


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## Downward (14 May 2010)

With the public sector as well there is no way anyone will be able to recover the bikes. We have Copiers that are at the end of lease and getting the company to take them back is a nightmare. I recall we had one expired in 2001 and it got took away finally in 2009. You could be really awkward if they did want a crazy amount for your bike and in the end they would give up. Infact all they would do is send out a stock letter a few times.


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## Downward (14 May 2010)

I think Cyclescheme have won the Tender to supply the PS and it expires in 2012. By then the owners will be too rich to worry about it dying out. All it is is a few admin people anyway cause thats all they do administer the scheme.


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## Norm (14 May 2010)

Jezston said:


> So what happens if, at the end of your scheme, they (whoever 'they' are) turn around and say they want more than you are prepared to pay? What then?


You walk away. What would you expect to happen? 



Black knight said:


> What if the bike is stolen?
> 
> I know you have to pay your lease payments, but surely the loss of the bike should be covered by the owners insurance.
> 
> How would buying the (now non existant) bike go ahead in this case?


Every cycle to work policy that I've seen puts the obligation for insurance on the employee who is hiring the bike, not on the employer / owner. 



dodgy said:


> Buy bike for £1000 on C2W scheme
> Pay roughly £50 per month (depending on your tax band)
> After 12 months, you've paid £600
> You have the bike valued (properly) and it's worth £600
> ...



The "fail" here is, as I pointed out above, that we are in a transition. Most Cycle To Work schemes are currently set up so that the employee pays off the total purchase price of the bike by way of the salary deductions and pays a nominal fee to buy the bike at the end of the rental period. This is not how the schemes should work.

What should happen is that the total amount the employee pays covers the value of the bike. Thus, in your example:


*Employer* buys bike for £1000 on C2W scheme
*Employee signs a salary sacrifice to reduce their salary by £33 per month*
After 12 months, *you've sacrificed £400 (although, depending on your tax band, this has only cost you around £200)*
You have the bike valued (properly) and it's worth £600
So employer asks for £600
Total cost of a £1000 bike = *£800*
The savings are not as much as doing it illegally, as most schemes have done in the past, but that is how the rules have always been set out and you still make a saving.


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## BenM (14 May 2010)

> What should happen is that the total amount the employee pays covers the value of the bike. Thus, in your example:
> 
> 
> *Employer* buys bike for £1000 on C2W scheme
> ...



Fixored to illustrate how to get a real Bargain! 

B.


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## Downward (14 May 2010)

Norm said:


> You walk away. What would you expect to happen?
> 
> 
> Every cycle to work policy that I've seen puts the obligation for insurance on the employee who is hiring the bike, not on the employer / owner.
> ...



On £1000 you sacrifice £83.33. Your company save on NI contributions themselves on £1000 so buying a £1k bike they are not losing £600 on it. Infact they are saving £10 per month on NI contributions or £120 per year so they are gaining.


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## Jezston (14 May 2010)

Where do you get the £33 per month figure from?

A £1000 bike would cost me around £50 a month (based on my £400 bike costing me £20 a month), and that's AFTER the tax adjustment. So to adjust your figures it would be:


*Employer* buys bike for £1000 on C2W scheme
*Employee signs a salary sacrifice to reduce their salary by £50 per month*
After 12 months, *you've sacrificed £600 *
You have the bike valued (properly) and it's worth £600
So employer asks for £600
Total cost of a £1000 bike = *£1200*


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## Downward (14 May 2010)

Jezston said:


> Where do you get the £33 per month figure from?
> 
> A £1000 bike would cost me around £50 a month (based on my £400 bike costing me £20 a month), and that's AFTER the tax adjustment. So to adjust your figures it would be:
> 
> ...



Yeah see above ! My employer states on my payslip that £83.33 is deducted. I work out that actually with Tax and NI reduced this is about £55. So your company are not losing anything (infact gaining 12% per scheme) and Cyclescheme making a cool 15% per sale. The only losers are HMRC who don't see the £40 per month that they would normally get from the deduction on your salary.


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## Norm (14 May 2010)

All of which perfectly illustrates the point about current practice which I was making.

My figures were the way that the schemes should be set up to keep within the regulations.



Downward said:


> On £1000 you sacrifice £83.33.


Because your scheme was set up to recover the capital cost of the bike through the rental payments. *This is wrong.* 

If the scheme was to take into account the requirement for the bikes to be sold at market value, then you can allow for this by deducting a smaller amount in rental payments.


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## Jezston (14 May 2010)

Norm, I do appreciate the info you've been providing on this thread, however I think you might actually be getting something wrong here.

Entering my details on cyclescheme.co.uk 's own calculator on their website gives me more or less identical figures to what I estimated (final cost of bike - £587, or £48 a month) - the only way to bring that down is if I had a salary in the highest tax bracket which takes the final cost down to £502 (or £42 a month) - still way above your quoted figures.

Surely the figures I get from there have got to be accurate?


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## Downward (14 May 2010)

Norm said:


> All of which perfectly illustrates the point about current practice which I was making.
> 
> My figures were the way that the schemes should be set up to keep within the regulations.
> 
> ...



Well Cyclescheme have managed to sign up a lot of Public Sector organisations and have release this. HMRC has clarified their stance on the sale of cycles (or Transfer of Ownership) to employees after the end of a hire period by stating the following: ‘… An employer or a third party cycle provider may choose to offer the cycle for sale to the employee after the loan has ended. If the employee is able to buy the cycle for less than its market value, the difference will be liable to tax and to employer’s Class 1A NIC liability’; and ‘each cycle that is sold in this way should be valued at the time of sale’; It is worth pointing out that the sale of cycles after the end of the hire period will have no bearing on the original tax exemption under the salary sacrifice arrangement; any subsequent liability for the perceived shortfall in the amount charged for the sale will be limited to the employee’s tax and employer’s NI. To avoid any such liability, Cyclescheme recommends employers to nominate at any point during their scheme to transfer ownership of all Bicycles to Cyclescheme, and take advantage of our free-of-charge Transfer of Ownership service. Alternatively, employers who choose to administer the sale of cycles themselves will need to seek expert advice to value Bicycles after the end of each individual hire period, or direct employees to do so independently, and charge an appropriate Fair Market Value. Cyclescheme pays the employer a one-off nominal fee to transfer the ownership of all bikes, and subsequently handles all aspects of the administration of the sale of cycles to the employees. There is no cost to the employer, but Cyclescheme retains Fair Market Values paid by the employees. After the end of each hire period Cyclescheme will contact the employee to assess the condition of the Bicycle and issue a Secondary Agreement for the appropriate value. Cyclescheme utilises the extensive knowledge and experience of its Partner Bike Shops, currently numbering over 1500 outlets across the UK, when evaluating the condition of bikes. Needless to say, it is not possible to predict the market value of a bike prior to the end of the hire period, but in our experience the bike’s value is typically a fraction of the original retail price due to the frequency of usage encountered when commuting to work throughout the year and any additional leisure usage. Employees can pay to take ownership of bikes with ease using our on-line payment portal, and Cyclescheme issues a full receipt to the employee. All stages of the transaction and the value of sale are stored securely on our Extranet system, accessible to employer administrators at all times.


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## GrasB (14 May 2010)

How do you get to the £33/month for the bike Norm? Working on the system we have at work (a slightly odd-ball 10 month period but it gets around issues with yearly contracts & awarded grants)...

Employer buys bike for £1250 on C2W scheme
Employee signs a salary sacrifice to reduce their salary by ~£87.50 per month net (£125 gross) over 10 months
After 10 months, you've sacrificed £875 of your net salary 
You have the bike valued (properly) and it's worth £750
So employer asks for £750
Total cost of a £1250 bike = *£1625*


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## DrSquirrel (14 May 2010)

Downward said:


> Well Cyclescheme have managed to sign up a lot of Public Sector organisations and have release this. HMRC has clarified their stance on the sale of cycles (or Transfer of Ownership) to employees after the end of a hire period by stating the following: ‘… An employer or a third party cycle provider may choose to offer the cycle for sale to the employee after the loan has ended. If the employee is able to buy the cycle for less than its market value, the difference will be liable to tax and to employer’s Class 1A NIC liability’; and ‘each cycle that is sold in this way should be valued at the time of sale’; It is worth pointing out that the sale of cycles after the end of the hire period will have no bearing on the original tax exemption under the salary sacrifice arrangement; any subsequent liability for the perceived shortfall in the amount charged for the sale will be limited to the employee’s tax and employer’s NI. To avoid any such liability, Cyclescheme recommends employers to nominate at any point during their scheme to transfer ownership of all Bicycles to Cyclescheme, and take advantage of our free-of-charge Transfer of Ownership service. Alternatively, employers who choose to administer the sale of cycles themselves will need to seek expert advice to value Bicycles after the end of each individual hire period, or direct employees to do so independently, and charge an appropriate Fair Market Value. Cyclescheme pays the employer a one-off nominal fee to transfer the ownership of all bikes, and subsequently handles all aspects of the administration of the sale of cycles to the employees. There is no cost to the employer, but Cyclescheme retains Fair Market Values paid by the employees. After the end of each hire period Cyclescheme will contact the employee to assess the condition of the Bicycle and issue a Secondary Agreement for the appropriate value. Cyclescheme utilises the extensive knowledge and experience of its Partner Bike Shops, currently numbering over 1500 outlets across the UK, when evaluating the condition of bikes. Needless to say, it is not possible to predict the market value of a bike prior to the end of the hire period, but in our experience the bike’s value is typically a fraction of the original retail price due to the frequency of usage encountered when commuting to work throughout the year and any additional leisure usage. Employees can pay to take ownership of bikes with ease using our on-line payment portal, and Cyclescheme issues a full receipt to the employee. All stages of the transaction and the value of sale are stored securely on our Extranet system, accessible to employer administrators at all times.



I'm kind of horrified at this.

I always wondered what cyclescheme actually does... since at the end the bike is the ownership of your company so they shouldn't be inolved, this is a way for them to get involved it seems. I doubt many companies need to get "expert advice". And a lot of companies are already used to using salary sacrifice for various reasons anyway, but of course cyclescheme suggesting administering it is harder than it is is good business...

Transferring ownership of items to employees is not uncommon either...

This also possibly answers my question as to how cyclescheme can invoice end users (as I have read some people mentioning), and saying they need to pay for disposal if you don't buy it back.

More people need to tell their employers they can just keep the bike and loan it for free!

Cyclescheme is a whole load of bull...




GrasB said:


> How do you get to the £33/month for the bike Norm? Working on the system we have at work (a slightly odd-ball 10 month period but it gets around issues with yearly contracts & awarded grants)...
> 
> Employer buys bike for £1250 on C2W scheme
> Employee signs a salary sacrifice to reduce their salary by ~£87.50 per month net (£125 gross) over 10 months
> ...




You do have to remember you are not paying to own it... you are leasing it. If you leased a bike for say 12 months, and then went out and bought a second hand 12 month old bike... you'd pay the same.

Which is obviously just as crazy as your calcs.

Basically this is some kind of convoluted "hire purchase" scheme where the government is allowing it for these specific items, but you still have to "hide" the fact it's most likely to be purchased at the end (guidance says not to specific that it can be sold at the end, but only it MAY be available for purchase).

If HMRC is really going to "crack down" on fair market value, they are either crazy or blind to what they are doing.

If the government can set up this scheme, why can't they just allow hire purchase!


----------



## Norm (14 May 2010)

#1 I would advise any company *NOT TO TRANSFER THE OWNERSHIP OF THE BIKES TO CYCLESCHEME. EVER.* They are a profit making organisation which will screw the employees.

And, please will people broaden their horizons. All the stuff which is quoting current schemes just emphasises that they are not set up properly because they all assume the nominal fee to sell the bikes at the end of the rental period. And yes, I would say that includes the cyclescheme.



GrasB said:


> How do you get to the £33/month for the bike Norm? *Working on the system we have at work *(a slightly odd-ball 10 month period but it gets around issues with yearly contracts & awarded grants)...
> 
> Employer buys bike for £1250 on C2W scheme
> Employee signs a salary sacrifice to reduce their salary by ~£87.50 per month net (£125 gross) over 10 months
> ...


As I said, the bit I've highlighted show that it is your employers current scheme is wrong. The bit you've highlighted shows how this doesn't work. (And I'm hoping that your employer has a consumer credit licence, or they are giving themselves a whole new problem by going over £1000 - but I'll leave that aside)

I arrived at £33 because it makes the deduction £400 over the rental period. Add that to the anticipated £600 value for the bike at the end of the rental period and you get to the capital cost. *There is no requirement in legislation or recommendations for the rental payments / salary deduction to equal the capital value of the bike.* 

Once you guys get away from that, the rest will, I'm sure, fall into place.



Jezston said:


> Norm, I do appreciate the info you've been providing on this thread, however I think you might actually be getting something wrong here.
> 
> Entering my details on cyclescheme.co.uk 's own calculator on their website gives me more or less identical figures to what I estimated (final cost of bike - £587, or £48 a month) - the only way to bring that down is if I had a salary in the highest tax bracket which takes the final cost down to £502 (or £42 a month) - still way above your quoted figures.
> 
> Surely the figures I get from there have got to be accurate?


Yes, they accurately show that cyclescheme's calculator wrongly *requires* the rental payments to cover the capital cost. 

I'll say it again, *every *example given on here so far illustrates nothing other than the scheme administrators have got it wrong.


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## 2Loose (14 May 2010)

Nope, I think (know) that Norm has it correct. Well, the way it SHOULD be run anyway. 

In current practice however, people like us who are n+ months into the scheme are cacking bricks because it could mean we will spend more than retail cost when we were assured it would cost less.

In Norm's (no offence) by the book world, it would be done properly, as he has stated, resulting in a good discount over the year for the purchaser. But this clampdown so far looks like it will mean that we (who have our schemes run by cyclescheme or whoever) may well end up paying more in the end than using our credit cards in the first place.

It looks like HMRC are trying to provide a way forward via valuation matrix or whatever, but at the moment things are very unsettled and uncertain, therefore the worry.

Half of my bike is now not original because parts were worn out, any idea if that could count of the final valuation. I mean a bike with 1 original wheel and no drive train is going to be worth pretty much nothing! (I win?)


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## GrasB (14 May 2010)

This is all fine & dandy but how does one work out what the rental charge should be. This leads on to the interesting question, of which Norm could well give the best answer, but does the guidance give any idea of how much of the bikes value should be charged as rental?


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## Norm (14 May 2010)

2Loose said:


> In Norm's (no offence) by the book world, it would be done properly, as he has stated, resulting in a good discount over the year for the purchaser. But this clampdown so far looks like it will mean that we (who have our schemes run by cyclescheme or whoever) may well end up paying more in the end than using our credit cards in the first place.


None taken... mainly because I fell for the same trap when setting up a scheme last October.  Well, trap might be the wrong word, but I hope you know what I mean. 

Everyone was doing it wrong, possibly misguided by examples in the DfT's notes, possibly because they (we  ) took accepted custom and practice to be correct. I'm guessing (charitably) that the DfT and HMC&E might have been discussing this mistake, resulting in the new guidelines, but it's going to leave people out of pocket.

Because the rental plans are non-revocable, those currently in a scheme paying rentals and later subject to paying market price may be screwed. 

Another issue is, as GrasB mentions, that the question mark over the "worth" of the bike will now need to be factored in to the calculations for the monthly payments. Because the sale price cannot be guaranteed at the start of the rental period, there will be some concerns from both the employers and the employees about that uncertainty. My guess would be for the employer to make an assumption that a 12 month old bike would be worth 60% of the new price (or 50% or 40%, just pick a number!) and use that for the rentals. At the end of the period, make sure the actual valuation is close to that (get a friendly LBS to quote).

On the actual valuation, I would be surprised if HMC&E ever went down into the detail - I don't think that anyone has personal experience of an HMC&E check, so this whole thread could be just scare-mongering anyway.  

Further, one of the main things which got my scheme approved was that the payback time for the bikes was relatively short, so the employers were not out of pocket for long. Implementing an amended scheme would mean, in my example, that the employer forked out £1k for the bike, but would only reduce their salary costs by £400 over the 12 months. Even with the VAT and NI savings, the employer would be out of pocket until the end of the rental period. Some employers might not like that idea.

The main thing, IMO, is that people getting new bikes under the scheme need to make sure that the scheme rules and payments reflects life under the new guidelines.


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## Downward (14 May 2010)

Cyclescheme won't charge anymore than 5% as it makes no good business sense. All the people that use it usually go back for a 2nd bike. If they put the price up that they charge you to take ownership they will lose a lot of this repeat business. On another note Norm - Bit concerned now, We are going to have to go out to OJEU for this as we spend £35k ish per annum with Cyclescheme so are looking for a company to administer the scheme but surely everyone ( I am thinking Evans or Halfords although this really limits peoples choices) is out to make a profit ?


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## fossyant (14 May 2010)

I've just come out of my first year with cyclescheme...

Can't complain - I was a test case for work, then the advisory 5% was asked for last week to settle..... flipping good job....

I was glad my 12 months was at an end - I won't be entering into another... too much risk at the moment...

I use my bike a fair bit for business, so the real saving was not much over 12 months (if anything), but I was actually able to get a 'work' bike via the boss......


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## Norm (15 May 2010)

Downward said:


> Cyclescheme won't charge anymore than 5% as it makes no good business sense.


It is possible that cyclescheme could prove beneficial, because they could charge you the 5% which has become generally accepted without the employee incurring a tax liability, because they are an independent third party.

However, they remain a commercial operation so I remain cynical until we've seen some numbers coming in.



Downward said:


> ...but surely everyone ( I am thinking Evans or Halfords although this really limits peoples choices) is out to make a profit ?


Which is exactly why I advocate not using any third party. They are easy enough to set up for yourself and, if your employer made an agreement with a couple of LBS's which put £35k their way, I'm sure that you and / or your employer could get a significant discount. Just by removing cyclescheme from the equation, I was able to get 10% and that was only on the promise of a couple of bikes.


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## DrSquirrel (15 May 2010)

Norm, my "local" shop even says on their site they will give 10% if you don't use cyclescheme, although I think their prices are only really competative with the 10% anyway (which is easy to get, club membership is cheap etc).




fossyant said:


> I've just come out of my first year with cyclescheme...
> 
> Can't complain - I was a test case for work, then the advisory 5% was asked for last week to settle..... flipping good job....
> 
> ...



Can you confirm who you paid the 5% to? Because technically it should be your employer, although I have read some people saying they were invoiced by cyclescheme which is really strange imo (possibly not correct).


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## Norm (15 May 2010)

Some employers are selling the bikes to cyclescheme during the rental period, or using cyclescheme to buy the bikes and paying over the rental amounts. I think that's a bad thing to do but, if that has happened, it would be cyclescheme who invoiced the employee at the end of the hire period.


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## DrSquirrel (15 May 2010)

Ouch...

Annoyingly cyclescheme seem to be exploiting companies by hiding true facts. It shouldn't be the shop that pays to "administer" the scheme (its a commission? pah). If anything it should be the employer paying the % because they aren't willing to handle it themselves.

Now I hear employers are selling the bikes over to cyclescheme and using them to buy the bikes... isn't that more administration for your company to pay cyclescheme every month? (I assume there is some kind of credit agreement needed here, and obviously the interest on it).


I still don't see how cyclescheme can try to charge you for collection/disposal if you don't buy it back though? (fossyant - can you confirm what they were saying if you didn't pay/want it).


Nightmare :/


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## Downward (15 May 2010)

drsquirrel said:


> Ouch...
> 
> Annoyingly cyclescheme seem to be exploiting companies by hiding true facts. It shouldn't be the shop that pays to "administer" the scheme (its a commission? pah). If anything it should be the employer paying the % because they aren't willing to handle it themselves.
> 
> ...



Cyclescheme is just a small office of a handful of Admin assistants. They have no way of collecting up bikes hence why they say you either pay X % to purchase or pay x % to dispose of. Not sure what would happen if you refuse to pay but really such a small fee to "own" your bike why would you dig your heels in ?


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## MacB (15 May 2010)

Downward said:


> Cyclescheme pays the employer a one-off nominal fee to transfer the ownership of all bikes, and subsequently handles all aspects of the administration of the sale of cycles to the employees. There is no cost to the employer, but Cyclescheme retains Fair Market Values paid by the employees. After the end of each hire period Cyclescheme will contact the employee to assess the condition of the Bicycle and issue a Secondary Agreement for the appropriate value. Cyclescheme utilises the extensive knowledge and experience of its Partner Bike Shops, currently numbering over 1500 outlets across the UK, when evaluating the condition of bikes. Needless to say, it is not possible to predict the market value of a bike prior to the end of the hire period, but in our experience the bike’s value is typically a fraction of the original retail price due to the frequency of usage encountered when commuting to work throughout the year and any additional leisure usage.



This would be the potentially alarming bit - could be translated as:-

it's a lot of hassle but we'll take this off your hands and even pay a small fee - coz we're gonna milk those final valuations nice

when the, surprisingly high, final valuation arrives via Secondary Agreement we'll also offer credit terms on that - but the interest will make your eyes bleed

Final Value is typically tiny but we'll mysteriously have a massive amount of non-typical situations


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## DrSquirrel (15 May 2010)

Downward said:


> Cyclescheme is just a small office of a handful of Admin assistants. They have no way of collecting up bikes hence why they say you either pay X % to purchase or pay x % to dispose of. Not sure what would happen if you refuse to pay but really such a small fee to "own" your bike why would you dig your heels in ?



Aye, it's true but it is a bully boy tactic though.

And I was just using it previously as a point as I wondered why they were asking some people to pay up or pay this when surely the company owns the bike (which has been answered now as to why).

Considering people are talking/worried about the fair market value issue, this could be more important, and makes you wonder how much your company might sell the bike to them and how much they might end up trying to charge you. I'm not sure how the valuing and cost of selling to to cyclescheme would be, but they shouldn't have to worry (in a word) about the fair market value yes?


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## Downward (15 May 2010)

I doubt CS will have the capacity or ability to value any of the bikes on the scheme. As discussed before they don't have the resources. I'd like to see them say "Well your bike is worth £400 so pay up" and you say "ok come and collect it, I am available from 10pm to 10.30pm"


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## Norm (15 May 2010)

As I said earlier, don't sell the bikes to cyclescheme. Aside from other considerations, at the end of the hire period, it is perfectly acceptable for the employer to allow the employee to continue using the bike without charge. If that happens, say over a further 24 month period, before the bike is offered for sale, the employee will then be buying a 3 year rather than 1 year old bike. 

This option is not available if your employer has sold the bike to cyclescheme.


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## Jezston (16 May 2010)

Norm: still very confused here. From what you have said, are you saying 1. an employer can do the 'scheme' themselves and not have to involve a private third party (e.g. Cyclescheme or Evans or Halfords -assuming these are separate from each other) and 2. the employee doesn't have to actually pay the value of the bicycle back over the 12 months?


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## Norm (16 May 2010)

Yes and yes. 

The scheme is very easy to set up and administer, I've said many times that _I think_ it is easier to administer the policy yourself than to use a third party.

And on the second point, definitely yes. The guidelines specifically say that there is no set period, 12 months is "usual" but the scheme I set up allowed anything over 3 months. I haven't seen anything which requires the level of the repayments to be any certain level, although *every* scheme I have seen does set the repayments to cover the capital over the rental period, I don't think that it is a requirement of the regulations. 

I believe that this is where the current schemes fall down, they maximise the tax benefit (my example only saved the employee 20% rather than the more usual 50%) but the current schemes are all set up with the expectation that the end payment would be a nominal sum.


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## GrasB (16 May 2010)

There is no reason to use an outside administrator. However in larger businesses/organisations with complicated internal structures it may well make more sense to use someone like cyclescheme to administer the scheme rather than keep it internal & lose a fair amount of workers time dealing with the paperwork generated internal red tape.


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## Jezston (16 May 2010)

That's very interesting - cheers.

Now, I THINK that perhaps my employer might actually be doing this, or be happy to. I know they already will adapt to whatever scheme the shop uses - I recall Evans being initially suspicious that my company could buy my bike through them if they were already using other schemes for other shops.

The admin staff are as confused as to what this will mean as I am.


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## Iainj837 (16 May 2010)

I think the cycle2work scheme is a brill idea but it is open to abuse,
I know 1 guy that got a bike though the scheme, he rode it a couple of times then it was left in his garden and he never seemed to use it again.
I have had 2 bikes though the scheme my lastest is worth about £850 that's with light helmet and computer. 
Once the 18 months I think is up I will, I will do it again (if they continue to do the scheme)


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## DrSquirrel (16 May 2010)

Iainj837,
You could argue that he wouldn't have bought the bike if he didn't have the scheme thus would never have paid the tax anyway.
This way, puts some of his money to the bike shop and our economy (as much of it that stays in this country of course).





GrasB said:


> There is no reason to use an outside administrator. However in larger businesses/organisations with complicated internal structures it may well make more sense to use someone like cyclescheme to administer the scheme rather than keep it internal & lose a fair amount of workers time dealing with the paperwork generated internal red tape.



It's only red tape if you make it red tape, salary sacrifice is common, and making a payment (once) to an outside company for the bike is no different than adding a new supplier. A company could make it easier for themselves to only allow a local shop etc...


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## Tynan (16 May 2010)

taxpayers money being used to buy a bike that isn't used to ride to work is an abuse straight off as far as I'm concerned


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## MacB (16 May 2010)

Tynan said:


> taxpayers money being used to buy a bike that isn't used to ride to work is an abuse straight off as far as I'm concerned



Yep, straightlaced as this view may seem it's spot on, though there are arguments to be made around just getting people riding, commuting or otherwise. C2W for a commuting bike, you can even justify a second bike for leisure and as a backup commuter. Purely for leisure is an abuse and tax dodge.


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## Downward (16 May 2010)

MacB said:


> Yep, straightlaced as this view may seem it's spot on, though there are arguments to be made around just getting people riding, commuting or otherwise. C2W for a commuting bike, you can even justify a second bike for leisure and as a backup commuter. Purely for leisure is an abuse and tax dodge.



Yeah the employer should choose say 1 day per month where someone sits at the bike park for a couple of hours in the morning and notes down the bikes so that the person buying the bike has to actually ride it to work. No shows x amount of times and it's cough up the tax and ni you have dodged.


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## Tynan (16 May 2010)

typical of the government pissing money away, it stuns me that people are allowed to buy repeatedly on the scheme while other people can't at all merely because their firm doesn't offer the scheme, people congratulating themselves on their third or fourth bike on the cheme and planning their next one boils my piss


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## GrasB (16 May 2010)

drsquirrel said:


> It's only red tape if you make it red tape, salary sacrifice is common, and making a payment (once) to an outside company for the bike is no different than adding a new supplier. A company could make it easier for themselves to only allow a local shop etc...


The problem is the way some organisations deal with assets. If I go outside cyclescheme (which I can do if I want to) the paper work for the actual C2W bit is minimal. The fun comes in with dealing with the bike the procedure is as follows when adhering to the internal purchasing procedures:

Create a loan account if not made for the person
Issue the loan for the bike it's self
enter the bike as an asset
recover the loan cost from the departmental general expenses account 
issue an invoice to payroll for the value of the bike
remove the bike from the asset register
If the value is less than £300 only the first 2 apply & then it's really simple.


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## Norm (16 May 2010)

I can't help but feel that your ire is misplaced, Tynan. 

If the government sets up a legitimate way to reduce the cost of getting into cycling but some employers don't have a scheme, then I don't think the target should be those who have benefited.



GrasB said:


> If the value is less than £300 only the first 2 apply & then it's really simple.


That was initially an issue for me too. But the company only capitalised assets over £1,000, which was a handy limit because it tied with the maximum allowable value before getting a consumer credit licence.


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## marinyork (16 May 2010)

Tynan said:


> typical of the government pissing money away, it stuns me that people are allowed to buy repeatedly on the scheme while other people can't at all merely because their firm doesn't offer the scheme, people congratulating themselves on their third or fourth bike on the cheme and planning their next one boils my piss



As usually happens a lot of it is benefits for those that don't really need it. Some of the comments on this thread lack a bit of perspective, even if the bike cost more through the scheme a lot of poorer people would love to be able to get a bike with spread payments over 12 months interest free credit - even for 'cheaper bikes'.


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## GrasB (16 May 2010)

Norm said:


> That was initially an issue for me too. But the company only capitalised assets over £1,000, which was a handy limit because it tied with the maximum allowable value before getting a consumer credit licence.


The problem is we have to transfer the ownership of the bike to the payrol dep for accounting reasons, This in turn means it has to be an asset if more than a £300. With the cyclescheme it doesn't go through the departmental accounts so the standard fixed asset limit of £2000 applies.


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## The Jogger (16 May 2010)

our c2w is ongoing at the minute, £20 or 3%
I might get a cheapie road bike, just got to break the news to mrs j


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## Norm (16 May 2010)

marinyork said:


> As usually happens a lot of it is benefits for those that don't really need it. Some of the comments on this thread lack a bit of perspective, even if the bike cost more through the scheme a lot of poorer people would love to be able to get a bike with spread payments over 12 months interest free credit - even for 'cheaper bikes'.


+1 Although I think the differences will be reduced. Certainly if they start enforcing the regulations, as (assuming the numbers I have previously posted are close) it would "only" result in a saving of about 20% anyway. 

I have talked my LBS down most of that amount without all the hassle of committing to working for the same employer for the rental period and the uncertainty of the ending valuation.


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## Tynan (16 May 2010)

Norm said:


> I can't help but feel that your ire is misplaced, Tynan.
> 
> If the government sets up a legitimate way to reduce the cost of getting into cycling but some employers don't have a scheme, then I don't think the target should be those who have benefited.



I blame the govt for setting up a scheme in such a way that it can be implemented or not by employers

I blame them for setting it up in such a way that people can buy bikes repeatedly without ever showing that any of them are for commuting

And I blame people for taking advantage of such a lax and wasteful scheme because they can, after all, they're not resposnisible are they?

The only losers are the taxpayers so what the hell?

All part of the fabulous £6B to be saved from 'efficiency savings' perhaps


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## chap (16 May 2010)

*MC's expenses*



Tynan said:


> I blame the govt for setting up a scheme in such a way that it can be implemented or not by employers
> 
> I blame them for setting it up in such a way that people can buy bikes repeatedly without ever showing that any of them are for commuting
> 
> ...



I think it served its purpose. Let's be fair, it was never an incentive to spur the 2-wheeled Green revolution, nor was it an equaliser for the working class, and the impecunious, to be mobile in spite of soaring petrol prices and exorbitant poorly-run monopolistic _public_-transport (as is the case in most of the South East, out with the M25)

This was just another box ticker, if you were one of the lucky middle-class people whose boss fancied a ride in the park every other weekend, the company adopted the scheme under the pretext of carbon-neutral banality. One could claim the progressive edge whilst their car-parks remained full to the tilt and its employees saved a bit of cash (and in many cases made a bit) all at the tax payers expense.

As this is not the P&L, I shalln't let this degenerate into a rant, but will sum up by saying this shambles of a scheme is very much reflective of the previous party in charge: taking the lazy way out, neglecting those they claim to represent, and providing yet another unessential nicety for the well off. Enjoy the scheme whilst it lasts, is sounded like a good little earner.


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## MacB (17 May 2010)

Norm said:


> I can't help but feel that your ire is misplaced, Tynan.
> 
> If the government sets up a legitimate way to reduce the cost of getting into cycling but some employers don't have a scheme, then I don't think the target should be those who have benefited.



Perhaps the ire isn't balanced correctly but it isn't helped by reading forum posts from some of the beneficiaries. You can draw parallels with things like MPs expenses. Yes people are acting within the rules, but also outside the spirit of the thing. Yes the scheme could have been better thought out and implemented. But people are still looking at it and making a conscious decision to avail themselves of a benefit for purposes it wasn't intended.

Tynan's just arguing for a bit more personal responsibility and I can see that argument. We can't just blame big brother or government.


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## summerdays (17 May 2010)

But equally think of the number of people who have joined this site asking about buying a bike as their company has a Bike to Work scheme, some probably not all have gone on to commute by bike... I know of several for whom it was the push ... including my next door neighbour who I never see walk anywhere other than to the garage has become a fair weather commuter. 

Mr Summerdays bought his bike through the scheme not intending to use it other than a handful of times to commute... then he started and cycled through the summer becoming a 5x a week cycle commuter ... then he decided to keep going into the winter until the weather turned too cold/wet. That was a couple of years ago and he has cycled almost every single day, even through the snow - that's one commuting car off the road.

To be honest for me as long as they ride a bike and it changed their attitude to cyclists on the road that would be a positive outcome of the scheme IMO.


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## John the Monkey (17 May 2010)

chap said:


> As this is not the P&L, I shalln't let this degenerate into a rant, but will sum up by saying this shambles of a scheme is very much reflective of the previous party in charge: taking the lazy way out, neglecting those they claim to represent, and providing yet another unessential nicety for the well off. Enjoy the scheme whilst it lasts, is sounded like a good little earner.


I got a Brompton on our scheme, a bike I could never have afforded otherwise.

I ride a full size bike most of the year, but on the days where I have to go between sites, or work late, or can't ride the full distance I would normally I take the Brompton.

It isn't *always* used for commuting, but I reckon the split is 80/20 in favour of journeys to work as opposed to leisure[1] journeys. It turns 40-50 minutes of walking (from home to train station, from station to work) into a pleasant 15-20 minute ride. The chap a couple of offices over from me got one on C2W too, his is used year round & he doesn't drive into Manchester anymore. 

[1] By which I mean pottering down to the shops &c, it really is a very handy little bike.

I'm sure there are tales of people buying crabon fibre wunderbikes on C2W. Equally well there are any number of tales of people getting their first "proper" bike, being introduced to the joys of their local bike shop, being able to afford something more than some heavy, misery inducing BSO for the first time, &c &c.


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## gb155 (17 May 2010)

Sorry, Can someone give me a summery of what is actually happening to the C2W scheme please ?


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## Norm (17 May 2010)

In theory, nothing. 

It appears that HMR&C have put it about that they are going to get tighter on the price paid if an employee buys a bike at the end of the rental period. The regs have always said that the sale needs to be at market price but this has largely been ignored with most paying a nominal sum (one month's rental or 5% of the purchase price have both been quoted). If the sale is at less than the market valuation, the difference is a taxable benefit, as it always has been.


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## gb155 (17 May 2010)

Norm said:


> In theory, nothing.
> 
> It appears that HMR&C have put it about that they are going to get tighter on the price paid if an employee buys a bike at the end of the rental period. The regs have always said that the sale needs to be at market price but this has largely been ignored with most paying a nominal sum (one month's rental or 5% of the purchase price have both been quoted). If the sale is at less than the market valuation, the difference is a taxable benefit, as it always has been.



Hummmm so in theory if you buy a £800 bike, fair value would be £550 ish so would £550 be payble ontop of the monthly rental payments or will they be taken into account ?


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## GrumpyGregry (17 May 2010)

Norm; what are the precise rules re use; my recollection is the bike has to be used at least 50% of the time for commuting yes? Don't think it says how that is measured, time on saddle, mileage, whatever. Meaning if someone gets a bike and rides it twice in the year so long as one of those rides is to work they comply.

It isn't just those people who buy bikes who benefit, plenty of bikeshops sell bikes that otherwise wouldn't go out the door... I heard a rumour that half of condors sales are on the scheme and they allow topup payments for bikes more than £1k!


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## Jezston (17 May 2010)

Norm:

Thanks again for all the clarification you've given on this thread, however I am still quite confused as it all seems very contradictory to what I've read and been told by the organisations running the schemes and from my employers!

If you do get a chance some time, I think it would be great if you could write a little guide for us, in laymans terms and also verbose enough to be shown to employers, as to how such schemes SHOULD work.

Might be worth a new thread?

Ta!


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## Norm (17 May 2010)

gb155 said:


> Hummmm so in theory if you buy a £800 bike, fair value would be £550 ish so would £550 be payble ontop of the monthly rental payments or will they be taken into account ?


That's pretty much the point of this thread.  The scheme's have been set up under the misunderstanding that the final payment can be nominal. Because so many people and schemes have broadcast that they only charge a nominal amount, HMR&C have now said (apparently, I still haven't seen anything direct from HMR&C) that they are going to enforce the sale prices and are looking to get third party valuations as evidence of the market rates.

The rental payments cannot be taken into account, though, or they would not be rental payments. If your employer was to give you back some of the salary you had sacrificed, that salary would no longer have been sacrificed and it would become taxable.



GregCollins said:


> Norm; what are the precise rules re use; my recollection is the bike has to be used at least 50% of the time for commuting yes? Don't think it says how that is measured, time on saddle, mileage, whatever. Meaning if someone gets a bike and rides it twice in the year so long as one of those rides is to work they comply.


Yes, that's pretty much my understanding. "Most" (which it says means over 50%) of the "use" (doesn't specify whether that is by journey, by mileage or by time) must be in qualifying journeys.

From the guidelines:


> The exemption removes the tax charge that would otherwise apply to cycles and cyclists’ safety equipment loaned to employees provided the following conditions are met:
> ● Ownership of the equipment is not transferred to the employee during the loan period;
> ● _Employees use the equipment mainly for qualifying journeys;
> i.e. for journeys made between the employee’s home and workplace, or part of those journeys (for example, to the station), or for journeys between one workplace and another_
> ...


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## GrumpyGregry (17 May 2010)

Norm said:


> Yes, that's pretty much my understanding. "Most" (which it says means over 50%) of the "use" (doesn't specify whether that is by journey, by mileage or by time) must be in qualifying journeys.



Good. My scheme mtb remains 'legal' then given that I've hardly ridden it at all in the last year.


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## Downward (17 May 2010)

I can relax in the knowledge that both my bikes are used primarily for commuting (Although is an extended commute classed as a leisure ride ?!)

I am one of those who have moved out of the car and onto a bike due to the Cycle to work initiative.


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## GrasB (17 May 2010)

Norm said:


> Yes, that's pretty much my understanding. "Most" (which it says means over 50%) of the "use" (doesn't specify whether that is by journey, by mileage or by time) must be in qualifying journeys.


In a not to serious thought if it's mileage then you also have the thing off does that include extended commutes... imagine if my direct route was 10 miles total but I road 25 every day. Now is that 10 miles commute & 15 miles leisure or 25 miles commute? 

Personally I've preferred to see a requirement to cycle in the equivalent of 1 day per working week over the lone period. This could be that you cycle in every day for 2 1/2 months in the middle of summer & then not cycling in at all in winter.


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## GrumpyGregry (17 May 2010)

in another not too serious thought I'm getting my new (3rd) scheme bike at the end of the month. The idea that someone can actively do some tax avoidance, and maybe even a spot of evasion, whilst still on the PAYE is irresistible.


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## chap (17 May 2010)

John the Monkey said:


> I got a Brompton on our scheme, a bike I could never have afforded otherwise.
> 
> I ride a full size bike most of the year, but on the days where I have to go between sites, or work late, or can't ride the full distance I would normally I take the Brompton.
> 
> ...




Glad to hear that the scheme worked out (as intended) for you, and good on you for choosing the Brompton 

There is always the chance that some people have been introduced to cycling, or given the opportunity to afford an otherwise cost-prohibitive yet worthy model, and that they have thus enjoyed the benefits of it. These remain the heart-warming tales that we wished would be more commonplace.

However, I would deem it far from flippant to say that the majority of up-takers have not followed this example, as evidenced by those who get 2nd helpings (and more) at the taxpayers expense. Like the MP's, I do not completely blame them, they are just acting upon natural opportunistic instincts and benefiting from a poorly-thought out scheme. Similarly, I would think one could easily justify such misuse through a degree of entitlement.

What I dislike is how poorly planned the scheme is, it should be available to all irrelevant of job, one should only be able to claim a single bike every 5 or so years, and cycling facilities should follow (especially in the public sector - Hospitals, Council offices, Libraries - where the scheme should be heavily marketed.) Finally, there should be a cut off for a minimal level of quality (think anti-BSO), better shops (not Halfords) should be encouraged to participate, and the scheme should be available especially (if not exclusively) to those on low incomes, and perhaps (perhaps) those on benefits. 

This would justify its being a Government scheme, and would make it more than a just plaything of the middle-class.


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## beastie (17 May 2010)

Downward said:


> I can relax in the knowledge that both my bikes are used primarily for commuting (Although is an extended commute classed as a leisure ride ?!)
> 
> I am one of those who have moved out of the car and onto a bike due to the Cycle to work initiative.



+ 1


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## summerdays (17 May 2010)

I don't know that it should only be available to those on low incomes ... it re-enforces the idea that a bike is a mode of transport for those who can't afford anything better. However the scheme currently does seem to exclude those on the lowest of incomes ... my income fluctuates monthly so that some months I don't earn enough and therefore I'm not eligible. But in reality I can afford to pay for a bike anyway.

I think that companies/government could start to offer incentives to encourage cycling rather than the staff subsidized car parks that are currently the norm.


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## beastie (17 May 2010)

Downward said:


> I can relax in the knowledge that both my bikes are used primarily for commuting (Although is an extended commute classed as a leisure ride ?!)
> 
> I am one of those who have moved out of the car and onto a bike due to the Cycle to work initiative.


+ 1 

hmmm bad choice of colour there


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## threebikesmcginty (17 May 2010)

beastie said:


> + 1
> 
> hmmm bad choice of colour there



Ahhh, that's better!


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## Tynan (17 May 2010)

plenty of people trundling around on the cheapest bikes ever seen sutely?


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## chap (17 May 2010)

*One for Lucas and the coalition perhaps*



beastie said:


> + 1





summerdays said:


> I don't know that it should only be available to those on low incomes ... it re-enforces the idea that a bike is a mode of transport for those who can't afford anything better. However the scheme currently does seem to exclude those on the lowest of incomes ... my income fluctuates monthly so that some months I don't earn enough and therefore I'm not eligible. But in reality I can afford to pay for a bike anyway.
> 
> I think that companies/government could start to offer incentives to encourage cycling rather than the staff subsidized car parks that are currently the norm.



Those are some fair points, and I understand that risk of stigmatisation. However, one of the roles of a Government is to ensure a springboard for the most economically vulnerable so that they can become self-sufficient. 

By continually segregating communities by cutting them off from each other and their resources via fast roads, and allowing unscrupulous companies to monopolise public-transportation, serve select neighbourhoods, run until 8pm in parts, and set exorbitant fares for these poorly served journeys; we are effectively widening the gap between the haves and have-nots. 

There is an higher degree of conformance amongst the 'less wealthy' and for many (especially men) owning a bike is shameful thing, seen as something for kids, toffs, and the poor. 

Therefore, such a poorly implemented scheme risks worsening the stigma on cyclists (esp. in car-centric places) since many will -understandably- be less willing to risk taking up cycling independently without the scheme, there will be more animosity shown towards cyclists upon its gaining publicity (think white-van men and taxi drivers, not excluding the 'road-tax arguement', and resentment following the supposed 'war on drivers'), and those less well-off that do cycle will generally be too poor to afford a car nor an enjoyable bike hence the omnipresent BSO - should they improve their lot, a new bicycle will be far from their minds. 

To be frank, whilst our welfare state is far too lax and generous, I would be happier to know that those on it got monthly bus-passes (and a decent bus service that covers the town / city, runs frequently, and has a reliable night service) as well as free bikes which upon finding a job they can continue to pay off, or exchange for a more expensive model. For this to work, it has to be implemented well, and more cycling facilities need to be set up in important parts of towns and cities (including more 1-way and pedestrianised centres.)

If it is to be a government scheme than let it be one for the citizenry, not just an unmonitored annual perk for the few.


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