# Cyclescheme bicycle condition assessment



## dubman (28 Jun 2010)

Hi all , Im coming to then end of my cyclescheme now , and have been contacted regards the condition of the bicycle. Im required to take it back to the shop for them to assess the final condition. They have provided me a form to take (BCAF1) which has 4 conditions A - D with 'A' being the best.

My question is does anybody have any experience with cyclescheme.co.uk. I understand prices will vary according to initial value of the bicycle.For example if the initial value of the bicycle was £1000 , what would cyclescheme consider a fair payment at the end of the scheme , how much may they charge for a condition A ?


----------



## HLaB (28 Jun 2010)

I've not really any experience of the 2nd hand market but I believe a fair price for a bikein good condition is: half the retail price, minus 10% per annum. I heard a rumour that cyclescheme were going to start doing this :-( I hope I wrong or it seems like there is little or no advantage in C2W :-(


----------



## summerdays (28 Jun 2010)

I would be interested in hearing the outcome of the valuation - both which band it ended up in and what the final price turned out to be. Mr Summerdays (who has still done nothing about getting on any of the bikes you lot suggested - too busy doing all his other duties) Bike to Work scheme will open in a couple of days time and he is contemplating whether to get a bike on it. I'm not sure whether it would be better to buy it outright instead.


----------



## potsy (28 Jun 2010)

This was one of my concerns too,seems fairly pointless if you end up paying market value at the end of it,where's the saving coming from?


----------



## Ben1982 (28 Jun 2010)

They used to say on the site that typically it would be around 5%, they don't anymore.. I'm guessing it's only for the bike too rather than the bike+any extra kit you bought.

If it's around the purchase value of the bike (or even 50%) then it would seriously tarnish the benefits of the scheme, and I would hope it would get lots of complaints as the tax benefit would disappear.


----------



## MrRidley (28 Jun 2010)

Direct from the site,

*At the end of the hire period employees may be given the opportunity to buy the bike for a full market value, however this cannot be an automatic entitlement. The cost of full market value cannot be stated before or during the hire period as this could be considered a benefit in kind and therefore not be eligible for tax benefits. 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.*

As this is my second bike from the scheme in two years, this is vastly different from last year, where i paid £25 back on a £500 voucher, as the final payment, now it seems they want quite a bit more


----------



## Ravenbait (28 Jun 2010)

Damn. Mine turns up tomorrow and this wasn't mentioned at all when I was filling in the forms to apply for it.

Sam


----------



## skudupnorth (28 Jun 2010)

I have to pay one more monthly payment to own the bike.The new scheme i am starting might be different but it's an easy way for me to buy a new bike.


----------



## BenM (28 Jun 2010)

dubman said:


> Im required to take it back to the shop for them to assess the final condition. They have provided me a form to take (BCAF1) which has 4 conditions A - D with 'A' being the best.


Lovely - so there is an obvious get out of jail card (almost) free there... write off the bike just before the assessment


----------



## rusky (28 Jun 2010)

jimbhoy said:


> Direct from the site,
> 
> *At the end of the hire period employees may be given the opportunity to buy the bike for a full market value, however this cannot be an automatic entitlement. The cost of full market value cannot be stated before or during the hire period as this could be considered a benefit in kind and therefore not be eligible for tax benefits. 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.*
> 
> As this is my second bike from the scheme in two years, this is vastly different from last year, where i paid £25 back on a £500 voucher, as the final payment, now it seems they want quite a bit more



I can't help thinking that's a typo & should read _fair _market value


----------



## Panter (28 Jun 2010)

This is the reply I received from them when I asked about it a while ago:



Dear Chris,
Further to your email regarding the Transfer of Ownership.
Following clarification from HMRC on their stance regarding the sale of cycles to employees at the end of the hire period it has been confirmed that the bikes should be individually valued at the end of the Hire Period. If you would prefer to opt out of Clause 5 of the employer contract and handle the Transfer of Ownership of the cycles please write to us on company headed paper and we can amend your account to reflect this.
We would recommend that the following procedures are put in place if you would like to handle the Transfer of Ownership to ensure you are operating within the HMRC guidelines:
At the end of the Hire Period contact the employee and ask them if they wish to take ownership of the bike.
If the employee does want to take ownership, the employer should seek expert advice (from local bike shops) to assess the value of the bike.
Based on this assessment, calculate how much the full market value should be.
Send an invoice to the employee along with a Secondary Agreement that they employee will need to sign to confirm the transfer
If the employee is able to purchase the bike for less than its market value, the difference will be liable to tax and employers NIC liability. 
To avoid any such liability employers can take advantage of Cycleschemes free-of-charge Transfer of Ownership service. 
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 Full 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. The employee can self-assess the condition of the bike using Cyclescheme simple yet comprehensive condition guide, or print off the form and take the bike to their local Partner Store for assessment. The employee would then be asked to categorise the condition of the bike on-line; below is a summary of the conditions:

Condition A: A cycle that has been ridden regularly but infrequently to and from work throughout the hire period. Predominantly used on the road or cycle paths for short distances

Condition B: A typical commuter’s bike that has been used regularly and frequently, maintained and serviced, been cleaned and lubricated throughout the hire period. Some leisure use has occurred

Condition C: A cycle that has been regularly used for commuting all year round. It has been used regularly for leisure that may have included off-road riding.

Condition D: A cycle that has been used frequently for commuting & leisure but without anything more than the minimum care necessary. Large mileages would have accumulated on the bicycle and a reasonable percentage of these may have occurred off-road.

The value of the FMV is variable according to the assessed condition of the bike, and the original retail price of the bike. 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 trust to have answered your question fully with the above information, but if you require any further guidance, please visit our website at www.cyclescheme.co.uk where you will find in-depth details and FAQs regarding many more aspects of the scheme.
Best wishes from the team at Cyclescheme!


----------



## dubman (28 Jun 2010)

BenM said:


> Lovely - so there is an obvious get out of jail card (almost) free there... write off the bike just before the assessment



Ive considered this but really , but would like to keep it long term. It seems a shame that for looking after it well i could be punishied. I have a few ideas , i could put on some knacked parts or i could offer the mechanic who assess it a little incentive to tick box D. 

I will keep you all informed of the final valuation and outcome.


----------



## killiekosmos (28 Jun 2010)

It is against the rules to ageee a final price in advance. Before you get it valued you need to ensure it looks right.

Plent of mud all over, worn, flat tyres, basd brakes, poor shisting etc. Just make some bad adjustments which you can correct later!


----------



## Browser (28 Jun 2010)

killiekosmos said:


> It is against the rules to ageee a final price in advance. Before you get it valued you need to ensure it looks right.
> 
> Plent of mud all over, worn, flat tyres, basd brakes, poor shisting etc. Just make some bad adjustments which you can correct later!



You won't need to, read the condition types again:

Condition A: A cycle that has been ridden regularly but infrequently to and from work throughout the hire period. Predominantly used on the road or cycle paths for short distances

Condition B: A typical commuter’s bike that has been used regularly and frequently, maintained and serviced, been cleaned and lubricated throughout the hire period. Some leisure use has occurred

Condition C: A cycle that has been regularly used for commuting all year round. It has been used regularly for leisure that may have included off-road riding.

Condition D: A cycle that has been used frequently for commuting & leisure but without anything more than the minimum care necessary. Large mileages would have accumulated on the bicycle and a reasonable percentage of these may have occurred off-road.

I use mine all year round for commuting, which in my eyes qualifies it for category C. Add some age-related degradation into tht mix and the final value shouldn't be too high.
Oh, this _was_ all explained in the Cyclescheme rules and has been since the beginning, all they've done recently is removed the (completely errouneous) bit about the final value nominally being 5%,which was total cobblers.


----------



## g00se (28 Jun 2010)

Grrr - well, my company's intranet still 'estimates' 5% for the final fee. I've kept the bike in immaculate nick and I don't want to hand the thing over - nor end up paying back most of the saving's I made. What's the point in the whole scheme?


----------



## Panter (28 Jun 2010)

g00se said:


> Grrr - well, my company's intranet still 'estimates' 5% for the final fee. I've kept the bike in immaculate nick and I don't want to hand the thing over - nor end up paying back most of the saving's I made. What's the point in the whole scheme?



There isn't one now. Not unless your company will lease it to you for free when the scheme ends.
It's well worth digging out the (very lengthy) thread on here about it, Norm explains it very well.


----------



## g00se (28 Jun 2010)

Well, if it does come to this when mine in valued - I think I've got some good leverage with my employer what with how they describe the scheme internally. I'll see in a few months....


----------



## Panter (28 Jun 2010)

Good luck, keep us posted.

It would be great if the scheme can continue.


----------



## peteoc (28 Jun 2010)

This is strange............I've already done the cycle scheme when I bought a MTB - at the end of the scheme I paid my work £25 and the bike became mine.

I'm now onto my 2nd cycle scheme bike, and I expect to pay the £25 again at the end


----------



## mark barker (28 Jun 2010)

g00se said:


> What's the point in the whole scheme?


I guess for some people its a way of getting a bike that they would've been unable to get otherwise. The scheme doesn't use a credit checking service, so for many it'd be an easy way to get finance.


----------



## g00se (28 Jun 2010)

It looks like the HMRC have been leaning on cyclescheme. The problem for them is that the 'current' members are not going to be happy when they find out their promised 40-50% saving may be modified. I would think most folk bought a bike nearly twice the value they could afford if they were paying directly themselves. Some may say that no-one should expect anything for free, but that's what everyone's been just about promised by their employers.


----------



## peteoc (28 Jun 2010)

the main point of the scheme is not paying the tax/national insurance on it.

Basically you pay for the bike before your tax and national insurance, so a £1000 bike costs around £780. you pay it off monthly.


----------



## Helly79 (28 Jun 2010)

I have just come to the end of my works cycle to work scheme and just looked on the Halford site where is says about how much you buy it back for and the say fair market valve of 5%

http://www.halfords.com/webapp/wcs/..._productId_563154_langId_-1_categoryId_173017


----------



## AndyCarolan (28 Jun 2010)

I cant see how the rules could be changed for those currently in the scheme as it would in effect change the terms and conditions to the member


----------



## JNR (28 Jun 2010)

Helly79 said:


> I have just come to the end of my works cycle to work scheme and just looked on the Halford site where is says about how much you buy it back for and the say fair market valve of 5%
> 
> http://www.halfords.com/webapp/wcs/..._productId_563154_langId_-1_categoryId_173017



I assume that the 5% referred to is TOGETHER with the 12 monthly payments already made. If a bike lost genuinely 95% of it's value in a year we'd all be cruising around on Tour de France bikes, surely?!


----------



## ufkacbln (28 Jun 2010)

What happens if you don't take up the offer, can you get a new bike every year and just pay the monthly payments?

Strikes me that if you declined the option then the bike would simply belong to the company..... and what would they do with it?


----------



## Norm (28 Jun 2010)

AndyCarolan said:


> I cant see how the rules could be changed for those currently in the scheme as it would in effect change the terms and conditions to the member


And there's the root of the problem. The rules have not changed, these are the rules as they have always been written - no pre-agreed sale price and the sale must be at market value. 

People have bent the rules in the past and HMRC are wanting to drag it back on track.


----------



## ufkacbln (28 Jun 2010)

My employer has a site NHS Bikes

Their breakdown for a Sirrus Elite;

RRP £539
Basic Rate tax payer total payments £353
"Disposal Fee" £53.90 +VAT

So the NHS is quoting a 10% disposal fee


You can also buy HiViz, helmets and locks with the same system and 10% fee.

However.... the closing date for applications is July 2009 - so this may have changed


----------



## AndyCarolan (28 Jun 2010)

Norm said:


> And there's the root of the problem. The rules have not changed, these are the rules as they have always been written - no pre-agreed sale price and the sale must be at market value.
> 
> People have bent the rules in the past and HMRC are wanting to drag it back on track.



I think the confusion is in the wording on individual offerers of the scheme. On all the documentation that Helen received last year, it listed disposal fees of 5% or 10%. Maybe its simply down to interpretation but in the case of Helen's Carrera Fury, between 5 and 10% = between £25 and £50 ish


----------



## g00se (28 Jun 2010)

AndyCarolan said:


> I think the confusion is in the wording on individual offerers of the scheme. On all the documentation that Helen received last year, it listed disposal fees of 5% or 10%. Maybe its simply down to interpretation but in the case of Helen's Carrera Fury, between 5 and 10% = between £25 and £50 ish



Exactly, the small print hasn't changed. It's just things like the cyclescheme savings calculator; the articles in the press; internal company advertising.... they all lead you to 'understand' that the final payout is about one more month's payments.


----------



## Bromptonaut (28 Jun 2010)

Mods - can we get all the threads on this into one place. The recent guidance from HMRC mandating valuation at the point of sale has rather put the cat amongst the pigeons. It would be very useful to have both user experience and the knowledge of those such as Norm and Chris KH who have employer involvement together. 

I'd suggest either a sticky in Commuting or a sub-forum.


----------



## sadjack (29 Jun 2010)

Cunobelin said:


> What happens if you don't take up the offer, can you get a new bike every year and just pay the monthly payments?
> 
> Strikes me that if you declined the option then the bike would simply belong to the company..... and what would they do with it?



Cunobelin has a good point. Depends if you want to keep the bike or not and if your employer's scheme keeps rolling on. 

I'd quite like a new bike every year.


----------



## Jezston (29 Jun 2010)

I've read all the threads on this and I still don't understand how it works - and neither do my employers - most of the answers I've read have lead to more questions, and some of the answers I've read the admin staff where I work who run the scheme disagree with.

Someone who does understand all this could really do with writing us some kind of guide, with references.


----------



## Matty (29 Jun 2010)

More thumbs down for the 'scheme'. I don't think it offers anything like the saving headline figures. Won't be using it again next year, I can save much more by getting a 'last year' model off t'internet.


----------



## peteoc (29 Jun 2010)

I beg to differ, the cyclescheme does work as it did for me last year! I've been through it once and currently going through it for the 2nd time.

Matty, yes you can save money by getting last years model off the net, but if you find somewhere that supplies last years model that also is part of the scheme then you save even more!

Jezston - what questions do you actually have? I'll answer them where possible.


----------



## HLaB (29 Jun 2010)

peteoc said:


> I beg to differ, the cyclescheme does work as it did for me *last year*! I've been through it once and currently going through it for the 2nd time.
> 
> Matty, yes you can save money by getting last years model off the net, but if you find somewhere that supplies last years model that also is part of the scheme then you save even more!
> 
> Jezston - what questions do you actually have? I'll answer them where possible.


Undoubtedly the scheme did work in the past when you paid a 'fair market value' at the end (say 5%) but its these recent developments over 'full market value' that have got me worried. I would quite like to hear Dubman's and others recent experience to hopefully put my worries to bed.


----------



## Jezston (29 Jun 2010)

Cheers, I shall try to remember what they were. Off the top of my head:

1. General confusion around the different ways of running the scheme - doing it yourself, using cyclescheme.co.uk, and schemes run by specific shops -e.g. Evans and Halfords - whats the difference?

2. Norm mentioned something in him running it himself that suggested the monthly repayments didn't have to actually pay off the value of the bike itself - this came from some of the demo calculations he presented in an earlier topic (which I can't find). How does that work?

3. Who actually owns the bike while it's on scheme? If it isn't mine, how comes it has to be my insurance that covers it? Mine got nicked and the one I'm currently riding is an insurance replacement - who does this bike belong to now? How would the assessment at the end of the term work if it isn't the same bike you started with? What if your bike was knackered and battered then got nicked and one week before it's due to be valued you are given a brand new shiny bike?

4. On a similar note to the above, what happens if bits get damaged and replaced, perhaps with totally different parts to the original spec, or you modify and/or 'upgrade' the bike yourself during the hire period? How does that affect the valuation?


----------



## fossyant (29 Jun 2010)

My scheme finished in May, and I paid the 5% final Fee - but can't be sure how this will change for the future.


----------



## adscrim (29 Jun 2010)

My understanding of it: - 

1. No difference, same as using different shops to buy the same product. Each shop may have different arrangements but you get the same thing in the end (at least you're supposed to).

2. I'm guessing that this is in relation to the VAT saving. C2W include an element of VAT saving which, were it your employer buying the bike, would be reclaimed through the regular VAT return process. As such, the total value of deductions made from salary would factor in the VAT already reclaimed.

3. Your employer owns the bike. I suspect the necessity for you to insure it is scheme specific. That is not the say that other schemes wouldn't also require it. If the bike is stolen or damaged and susbequently repaired, I suspect your agreement include a requirement for you to inform your employer and or the scheme operator. The HMRC requirement is that the transfer of the bike/equipment must be a full market value to avoid tax arising in respect of benefits in kind. 

I would think that the full market value would be in relation to the original item. Had your insurer replaced a bike then it was at cost to you. As such the market value would be in relation to the stolen bike which you obviously no longer have and as such wouldn't want to pay for.
Due to the insurance being a condition of your scheme, the new item would continue to be property of the employer and full market value would be required on transfer.

4. Again, I suspect damage should be reported to the owner of the bike. It would make sense to me that any expense incurred due to keeping the bike available for cycling to work should be removed from the final transfer price.

The HMRC guidance is, I think, deliberately vague. They know that entrants to the scheme will be getting a benefit in relation the reduce cost to them of the goods but have to publish guidance that is in line with other employee benefits and tax rules. Such as the agreement of a final transfer price at the end of the hire agreement effectively changing the agreement to 'hire-purchase' leaving it subject to full taxation requirements. It wouldn't surprise me if the scheme operators are thte ones pushing out the new 'rules'. It's seems entirely possible that they see it as a way to increase profit in relation the the schemes.

This is of course my take on it and I could be entirely wrong.


----------



## peteoc (29 Jun 2010)

1 - I believe all the schemes are relatively the same however I can only offer advice on using the cyclescheme. Looking at Evans it appears to be the same as the cyclescheme however you're obviously limited to only using Evans.

2 - Again i'm not sure how it can be done by yourself, unless you possibly have a company? As far as I'm aware the following applies in the example:

Bike costs £800, your work will pay the £800 to the cyclescheme.
You then pay your work back that £800 monthly from your pay (salary sacrifice) before tax/NI - this is where you save money. Your company in theory also saves money as they won't be paying the company contribution NI on the salary you're left with.

3 - This is where it's a grey area, your work own the bike however you have to provide insurance for it. In theory you should have advised your work that the bike you had was nicked, which in return your insurance company should have paid the money to your work. This would have ended your cyclescheme contract and you'd have to start another 1. I'm currently riding my 2nd bike after the 1st was written off, I've not told my work 
The end of term valuation is really down to your company, they're not able to simply write the bike off and give it to you, there has to be some sort of transaction which is why my work charge me £25 and invoice me for it.

4 - You're required to maintain the bike, if you're required to get the bike valued then you simply explain the fact that you've upgraded it. However I know quite a few people that have taken part in the scheme and never actually had to have the bike valued at the end.


----------



## LOGAN 5 (29 Jun 2010)

...and where does it leave anybody who paid cash to the retailer for a more expensive bike above the £1000 voucher when it comes to valuing it at "Full Market Value" For example, a £2000 bike (having paid £1000 in cash direct to the retailer) would probably be worth around £800 after a year which would be a silly amount to have to pay back after the monthly payments and the initial payment to the bike shop!


----------



## mark i (29 Jun 2010)

I may be missing something.... If you over the year you pay the cost of the bike minus the taxation that you would have paid on your wages, then at the end to pay for the bike you pay the "fair market value" the following statements follow.

You saved the amount you would have been taxed, if the market value of the bike is greater than this you pay more then the value of the bike. 

Example.

I buy a bike for £500. I am taxed overall at say 30% so I save 30% of 500 = £150.
i.e. I do pay £350.

If the fair market value of the bike is less than £150 I save money, if it is more than £150 I would have been better off buying outside of cycle to work. Surely this latter position cannot happen?

When my wife used her cycle to work scheme the final payment was another monthly payment (i.e. 13 monthly payments total gives ownership of the bike.)


----------



## MartinC (29 Jun 2010)

It sounds like Cyclescheme or the Revenue are getting exercised about market values at the end of the scheme. In the past it was a bit of a fiddle - the scheme allowed you to buy a bike (usually at full retail price) and pay for it over 1 or 2 years out of tax free income. I assumed the Government expected this - it was an incentive to get people to help the UK's traffic problems

If the scheme is now going to be regulated as it seems then the employer (or Cyclescheme) is going to make a profit - you'll get charged the full price of the bike in rental charges and the employer will then get the full residual value of the bike at the end. First of all no employee in their right mind is going to pay this much to rent a bike and the employer will need to pay the tax on the profit they make from this rental scheme.

I might be cynical but it seems like Cyclescheme have spotted an opportunity to make a few bob here by solving the employers admin problems with this and charging the employee the market value of the bike. Or it could be the Revenue just want to make the scheme so unattractive that no-one uses it. Or both - maybe Cyclescheme can see it's demise and want to make what they can while they can.

I got a bike on the scheme a few years back. My employer runs the scheme through Halfords. Their appears to be no mechanism in place to handle the end of the agreement. I finished paying a year or two ago, no-ones asked (or will ask) for the bike back or a transfer fee. If they do the they'll owe me money - I've been storing and maintaining their bike for quite a while now and I'd have to charge for that.


----------



## adscrim (29 Jun 2010)

HMRC don't really care about the value used to transfer the asset. The care about the tax in relation the asset transfer - from the HMRC website

_If a cycle is transferred to an employee at a nominal value (say 5 to 10% of the original retail price), then if the market value is higher, the employee will be taxable on the difference._ 

This says to me that the employer can transfer the asset at whatever value they choose providing the tax on the full market value is collect. This seems the contradict the implementation guidance provide on the DfT website.


----------



## Kestevan (29 Jun 2010)

Someone pointed out on here a while back that the only way that the scheme works if the "full market value" clause is enforced is if the employer charges less than the bikes purchase price and then sells on at the end.

I.E for a £1000 bike where you will pay say £720 after the NI deductions.

As it has been run up to now:
£1000 over 12mths at £60 p/m plus 5% final payment = £790 - Good.

or with the "enforced" final value payment
£1000 over 12mths at £60 p/m plus "full market value" of say £500 = 1220 - Not Good

or, as it probably should be where the monthly payments dont cover the total cost.
£1000 over 12mths at £22 p/m pluss "full market value" of £500 = £764.

The last one wouldn't work quite like that though, as you would not save nearly as much on the NI contributions with the smaller payments. You should still save the VAT value though. Problem with that method though, is it doesn't allow you to spread the payments as much because of the large final payment.

I think the main reason for the changes is that the taxman has realised just how much public money it's costing to provide £1000 carbon fibre toys to people  (my employer isn't running a scheme - can you tell)


----------



## mark barker (29 Jun 2010)

Kestevan said:


> I think the main reason for the changes is that the taxman has realised just how much public money it's costing to provide £1000 carbon fibre toys to people  (my employer isn't running a scheme - can you tell)


I think that is a valid point, and I'm sure the limit was way too high to start with. The idea of the scheme as I understand it was to encourage people to start commuting on a bike. To do that a £250 bike will be fine for a first time rider. Sure, theres those that'd argue that £1000+ is a commuter bike, but the riders of those types of bikes aren't really what the scheme was aiming at. 

As an aside, its worth remembering when working out how much the bike has cost that the payments are interest free. How much extra would you have had to pay if you'd put you purchase on a credit card or taken out a loan?


----------



## BenM (29 Jun 2010)

> How much extra would you have had to pay if you'd put you purchase on a credit card or taken out a loan?


Nothing extra - I could have bought the bike outright cash in hand (well debit card in hand at least) but who am I to turn down free money from the government?

B.


----------



## Jezston (29 Jun 2010)

mark barker said:


> I think that is a valid point, and I'm sure the limit was way too high to start with. The idea of the scheme as I understand it was to encourage people to start commuting on a bike. To do that a £250 bike will be fine for a first time rider. Sure, theres those that'd argue that £1000+ is a commuter bike, but the riders of those types of bikes aren't really what the scheme was aiming at.



I dunno, Bromptons tend to start at £700 - add on the cost of lock, lights, helmet, clothing, pump, bags ... that could easily start coming close to a grand. Electric assist bikes start at similar prices. Both are essentially 'commuter' bikes.


----------



## John the Monkey (29 Jun 2010)

Jezston said:


> I dunno, Bromptons tend to start at £700 - add on the cost of lock, lights, helmet, clothing, pump, bags ... that could easily start coming close to a grand. Electric assist bikes start at similar prices. Both are essentially 'commuter' bikes.



..and the scheme isn't aimed at "new" cyclists per se at all, it's aimed at encouraging more cycling to work full stop. for the new cyclist that *could* mean a £250 bike, for a keen leisure cyclist that could mean a fairly expensive winter/commuting bike that they don't mind mudguarding and racking up for a year 'round commute.

for someone who uses train or bus + bike, Brompton is where it's at (to the extent that some companies' regulations are written to exclude other types of folder) and they're not cheap.


----------



## addictfreak (29 Jun 2010)

I have used C2W once, I bought an expensive MTB (paid the extra). Bike is used for work along with my road bikes and also for leisure. 
At the end of the scheme I paid £20 to keep the bike. So all in all, I would say that I paid about £1250 for a £1500 bike.

Was it worth it, well yes because I have a cracking bike. Would I use it again? No, why. If I had shopped around on the internet I could have got the same bike for the same price (maybe a little cheaper) on interest free credit.

Incidently before anyone says I bent the rules, I first asked at the LBS if it was ok, then I asked my HR dept. Niether had any objections, whether they were ill informed or not I dont honestly know. But as far as im concerned, I checked and was told ok.


----------



## MartinC (29 Jun 2010)

Norm said:


> And there's the root of the problem. The rules have not changed, these are the rules as they have always been written - no pre-agreed sale price and the sale must be at market value.
> 
> People have bent the rules in the past and HMRC are wanting to drag it back on track.



I think Norm summed it up here. But there are several things going on. HMRC have realised that people are getting a worthwhile benefit if they get a valuable bike for a nominal amount at the end of the agreement and they want their cut - you pay tax on the difference between the full market value and what you pay.

I guess Cyclescheme can see an opportunity here. If HMRC get stricter about the disposal of the bike then employers will be motivated to take up their offer to manage this (see Panter's post a long way back). Cyclescheme would be paid to acquire bikes at knockdown prices (rather than the employee) and make money selling them on - hopefully to the employee. They need to be careful - they could end up with a load of bikes to sell on ebay and no more take up when employees don't see Cyclescheme administrated schemes as worth bothering with. 

To be honest the scheme was never going to do what it was intended too - get new people commuting by bike but was just a way for existing cyclists, retailers and employers to get some benefit at HMRC's expense. There was little benefit to anyone getting a cheap bike on the scheme. Encouraging newbies to get a BSO to try commuting seems unlikely to to have any long term benefit in my view, more likely to put them off for ever. I suppose you could argue that it was encouraging cycling in a wider sense and that was of benefit to the country in general. I have seen several several colleagues become cyclists and regular cycle commuters on the back of getting expensive bikes on the scheme (and a big discount 'cos of their higher rate income tax). 

It seems of even less use now. If HMRC get picky and Cyclescheme get greedy then employers and employees just won't bother with it. Maybe that's the intention - let it wither away and then scrap it 'cos it's not used. It's a bit like cycling farcilities in general - just for show.


----------



## MartinC (29 Jun 2010)

John the Monkey said:


> ..and the scheme isn't aimed at "new" cyclists per se at all, it's aimed at encouraging more cycling to work full stop. for the new cyclist that *could* mean a £250 bike, for a keen leisure cyclist that could mean a fairly expensive winter/commuting bike that they don't mind mudguarding and racking up for a year 'round commute.
> 
> for someone who uses train or bus + bike, Brompton is where it's at (to the extent that some companies' regulations are written to exclude other types of folder) and they're not cheap.



Good points. A few years back one of my colleagues, an Audax rider, got a folder on the scheme to change his mainly car/occasional bike commute to a folder/train commute 'cos he didn't want to do the full distance every day.


----------



## summerdays (29 Jun 2010)

MartinC said:


> I guess Cyclescheme can see an opportunity here. If HMRC get stricter about the disposal of the bike then employers will be motivated to take up their offer to manage this (see Panter's post a long way back). Cyclescheme would be paid to acquire bikes at knockdown prices (rather than the employee) and make money selling them on - hopefully to the employee. They need to be careful - they could end up with a load of bikes to sell on ebay and no more take up when employees don't see Cyclescheme administrated schemes as worth bothering with.



I too think Cyclescheme have seen a way to make more money - and promoting to employers that they will take the hassle out of their hands.



MartinC said:


> To be honest the scheme was never going to do what it was intended too - get new people commuting by bike but was just a way for existing cyclists, retailers and employers to get some benefit at HMRC's expense.



Still disagree - Mr Summerdays started cycling to work after acquiring a bike on the Bike to Work scheme. Not saying that's lots of commuters haven't benefited as well.


----------



## MartinC (29 Jun 2010)

summerdays said:


> Still disagree - Mr Summerdays started cycling to work after acquiring a bike on the Bike to Work scheme. Not saying that's lots of commuters haven't benefited as well.



I think you're right - I was being too negative.


----------



## Stephen-D (29 Jun 2010)

What if, i got £1000 voucher but my bike cost me £2500 which i paid for the rest myself, and when it comes to value the "Fair" market price is 5% of that bike, that means costing me more does it not?


----------



## Norm (29 Jun 2010)

I think more people are seeing why I wrote a few months back that everyone should encourage their employer to steer clear of Cyclescheme.



MartinC said:


> To be honest the scheme was never going to do what it was intended too - get new people commuting by bike...


The only reason I commuted by bike was that I was able to use the C2W scheme to buy the bike in the first place. There's no way I would have got the road bike without the C2W scheme.



Stephen-D said:


> What if, i got £1000 voucher but my bike cost me £2500 which i paid for the rest myself, and when it comes to value the "Fair" market price is 5% of that bike, that means costing me more does it not?


As I've said a couple of times, tough. The bike belongs to the employer, if you gave them £1,500 without realising the implications, then more fool you.


----------



## Stephen-D (29 Jun 2010)

Wow that does sound pretty crazy Norm, im really glad i didnt do that but its intereseting to know, i went for £1000 with my work! im only 4 months into it so i will see if any new changes will affect me.


----------



## potsy (29 Jun 2010)

My friend just got a Sirrus Elite on the bike to work scheme,he says the bike is far too nice to commute on so is using his old one


----------



## Soltydog (29 Jun 2010)

adscrim said:


> HMRC don't really care about the value used to transfer the asset. The care about the tax in relation the asset transfer - from the HMRC website
> 
> _If a cycle is transferred to an employee at a nominal value (say 5 to 10% of the original retail price), then if the market value is higher, the employee will be taxable on the difference._
> 
> This says to me that the employer can transfer the asset at whatever value they choose providing the tax on the full market value is collect. This seems the contradict the implementation guidance provide on the DfT website.



If you have maintained the bike at your cost over the 12 or 18 month lease period, ie lubes, tyres, etc then surely these costs can be offset against any tax in the difference between valuation & final payment


----------



## PrettyboyTim (29 Jun 2010)

If you don't like the amount they're asking to transfer ownership, leave the bike in reception. They may find they wish to offset some of that amount for you to handle 'disposal' for them...


----------



## Jezston (30 Jun 2010)

We really need to get an independent tax-specialist accountant/solicitor to go through the cycle to work scheme fine print and explain to us all in laymans terms how it all works and what the holes and contractions are.

Anyone fancy a whip-round?


----------



## Jezston (30 Jun 2010)

*Another big cycle scheme question bundle!*

There are private third party cycle schemes, and then your company can do it itself.

If you employer can go DIY, does this mean you could buy your bike from ANY shop, even one that isn't 'registered' (whatever that entails) to a particular scheme?

If so, what if the shop you want to buy it from is a very small, fairly new business that hasn't got round to doing things like being VAT registered etc?

And if that's do-able, what is there to stop you building a bike yourself and then your employer buying it off your 'shop' under the cycle scheme?


----------



## MartinC (30 Jun 2010)

Norm said:


> I think more people are seeing why I wrote a few months back that everyone should encourage their employer to steer clear of Cyclescheme.
> 
> 
> The only reason I commuted by bike was that I was able to use the C2W scheme to buy the bike in the first place. There's no way I would have got the road bike without the C2W scheme.
> ...



Good points Norm. This thread's been interesting for me in that I'd discounted too much the encouragement to commute by bike it's provided. It's been good to be reminded that there are many examples where it's done the job.

I someone's contributed £1500 to "their" bike then they might not have a (legal) leg to stand if their employer wants to include it in the transfer charge but it would be relatively easy to include it in HMRC's accounting of the benefit they've recieved.


----------



## Riding in Circles (30 Jun 2010)

I suspect dealers will be sympathetic to the buyers.


----------



## Bromptonaut (30 Jun 2010)

Catrike UK said:


> I suspect dealers will be sympathetic to the buyers.



Any experiences of this?

My employer, a large Govt Dept, used Cycle Solutions/Wheelies Direct. Neither is remotely interested in providing an end of lease valuation, nor will any other bike shop, as they don't want to take the risk.

Cycle Solutions publicity when the scheme opened referred to value being approximately equal to a 'month13' payment. The employer however has always inisited on a valuation - apparently their inspector got picky long before all the others.


----------



## crumpetman (30 Jun 2010)

I am curious as to what happens to someone if they do not take the bike to be assessed/valued and just keep on using it, or sell it privately at the end of the 12 months.

I really fancy a £1k carbon road bike if I can get it for about £50 a month.


----------



## summerdays (30 Jun 2010)

It's not yours to sell - so presumably the cycle scheme could ask for a lot of money?


----------



## Norm (30 Jun 2010)

summerdays said:


> It's not yours to sell - so presumably the cycle scheme could ask for a lot of money?


Indeed. Selling something which belongs to your employer would not, in general, be a good thing to do.

I think that this is a fundamental point which many miss. Just because you ride the bike, it is *not* yours, any more than a computer or company car. Selling the company's Mondeo would not go down well, nor would cashing in on a handful of Dells, so don't expect them to look too favourably on you selling *their* bike.

The other thing which is allowed in the scheme guidelines is that, at the end of the official rental period, your employer can allow you to continue using the bike without charge. Maybe that should be encouraged more.


----------



## summerdays (30 Jun 2010)

Norm said:


> The other thing which is allowed in the scheme guidelines is that, at the end of the official rental period, your employer *can* allow you to continue using the bike without charge. Maybe that should be encouraged more.



Is that an automatic allowance... or does it have to be agreed in advance? how does it work?

Would you still have to insure the bike... what would happen if it was stolen?

(Do you ever regret being the font of all knowledge on the Bike to Work scheme)


----------



## Riding in Circles (30 Jun 2010)

Bromptonaut said:


> Any experiences of this?
> 
> My employer, a large Govt Dept, used Cycle Solutions/Wheelies Direct. Neither is remotely interested in providing an end of lease valuation, nor will any other bike shop, as they don't want to take the risk.
> 
> Cycle Solutions publicity when the scheme opened referred to value being approximately equal to a 'month13' payment. The employer however has always inisited on a valuation - apparently their inspector got picky long before all the others.



The requirement of the dealer is to give a condition assessment according to Cyclescheme guidelines, A,B,C or D. I suspect now that Cyclescheme has been sold the new owners are looking at ways of making even greater profits although I cannot be sure. Giving a D rating to the bike will result in it having a much lower value.


----------



## dodgy (30 Jun 2010)

peteoc said:


> I beg to differ, the cyclescheme does work as it did for me last year! I've been through it once and currently going through it for the 2nd time.
> 
> Matty, yes you can save money by getting last years model off the net, *but if you find somewhere that supplies last years model that also is part of the scheme then you save even more*!
> 
> Jezston - what questions do you actually have? I'll answer them where possible.



That goes against what I've been told by several shops (one of which a trusted friend is the manager). They say they must use the full RRP of the bike in cycleschemes.


----------



## Norm (30 Jun 2010)

summerdays said:


> Is that an automatic allowance... or does it have to be agreed in advance? how does it work?


Hmm... yes... and no... 

It is automatic in that the HMRC regs do allow it to happen. Whether you can do it or not is down to your individual scheme rules.



summerdays said:


> Would you still have to insure the bike... what would happen if it was stolen?


Yes, most definitely. The bike remains the employer's property and there is still value in it. Nothing would change other than the rental payments.



summerdays said:



> (Do you ever regret being the font of all knowledge on the Bike to Work scheme)


No problem at all.... although I should point out that anything I write is no more or less valid than anyone else's ramblings. And the value of your home is at risk etc etc 



dodgy said:


> That goes against what I've been told by several shops (one of which a trusted friend is the manager). They say they must use the full RRP of the bike in cycleschemes.


There is nothing in the regs to require this. It could be that Cyclescheme set the requirement, which would just be another reason not to use them.


----------



## GrasB (30 Jun 2010)

Norm said:


> There is nothing in the regs to require this. It could be that Cyclescheme set the requirement, which would just be another reason not to use them.


It's a retailer requirement, with the shop only getting 90% of the value printed on the voucher it leaves precious little profit margin.


----------



## Norm (30 Jun 2010)

GrasB said:


> It's a retailer requirement, with the shop only getting 90% of the value printed on the voucher it leaves precious little profit margin.


Whilst that's true, that is not what dodgy said.


----------



## Nick_B (30 Jun 2010)

Let's face it the scheme has always been wrong-headed. (Hypocrite alert. My SCR2 was bought on cyclescheme).

Government (ie society) pays a financial incentive to encourage people to commute by bike rather than car. Society benefits (marginally) through reduced congestion (time lost for people and businesses), less pollution, less noise, less carbon, improved health (less NHS spend), etc. So far so good.

The problem is that the cost of the incentive should be good value to society. It makes no difference to congestion, etc if I'm riding a £300 or £3k bike. So the incentive should have no link to the value of the bike.

It seems now that HMRC have decided that people who use cyclescheme are getting a tax break, and this must be stoppped. The whole point of the scheme was to give tax breaks to encourage cycling ffs.

An earlier post suggested that the scheme could still be good value to the rider as a cheap form of finance. If that's the aim scrap the scheme and introduce interest free loans. Better still just give away £100 vouchers (through employers in return for a meaningless and un-monitored / un-checkable promise to ride to work once in a blue moon) for use at approved retailers. Better value for society, less cost to run, less grief. (Less of a discount I admit).

Strictly speaking my boss owned my bike for a year. I'm sure that's not how he saw it. We're not a second hand bike shop. The point for the business is to give a perk to staff at little or no cost. I was charged 5% of the value just so that the arrangement was legal. I'm sure that they wouldn't have asked for the 5% if they didn't have to.

The confusion now seems to be what the market value is at the end of the year. More muddled thinking from government. The scheme seems to allow a "self assessment" of condition and so this valuation has absolutely no credibility. Would you tick the "my bike is just like it came out of the factory, please charge be £500" box? And by the end of the year you've already paid for the bike once (less vat, NI and income tax which HMRC decided that they did not want to take at the time). Why should we pay again?


----------



## GrasB (30 Jun 2010)

Norm said:


> Whilst that's true, that is not what dodgy said.


I know it's not a cyclescheme requirement & that old model bikes from local retails can go through the cyclescheme at heavily discounted rates. When I was looking at a bike through cyclescheme I was offered old model discount with the total discount reduced by 10% after mentioning that it would be purchased through cyclescheme but not one of those retailers would give any discount on a current model bike.


----------



## Panter (1 Jul 2010)

Nick_B said:


> The confusion now seems to be what the market value is at the end of the year. More muddled thinking from government. *The scheme seems to allow a "self assessment" of condition and so this valuation has absolutely no credibility*. Would you tick the "my bike is just like it came out of the factory, please charge be £500" box? And by the end of the year you've already paid for the bike once (less vat, NI and income tax which HMRC decided that they did not want to take at the time). Why should we pay again?



No, it doesn't.

The valuation has to be done by an approved bike shop.


----------



## Norm (1 Jul 2010)

Panter said:


> No, it doesn't.
> 
> The valuation has to be done by an approved bike shop.


Just to clarify, this is also not a general requirement of the Cycle To Work, although specific policies may require independent valuations.

As Cyclescheme is a third party with a very strong vested interest in maximising the valuation, I would be very wary when using them.

Although, yet again, there are very few reasons for any company to outsource any part of their C2W policy to Cyclescheme. Hopefully, employers will soon realise that any good will which is generated by having a C2W policy in place will be completely negated by the crap which people go through.


----------



## Nick_B (1 Jul 2010)

Panter said:


> No, it doesn't.
> 
> The valuation has to be done by an approved bike shop.



I went back to see who's post I'd picked this up from. It was a certain Panter! The line I saw (quoting Cyclescheme) was:

"The employee can self-assess the condition of the bike using Cyclescheme simple yet comprehensive condition guide, or print off the form and take the bike to their local Partner Store for assessment."


----------



## Jezston (1 Jul 2010)

Norm: sorry to be a pain, but don't suppose I could hassle you to answer the following?




Jezston said:


> *Another big cycle scheme question bundle!*
> 
> There are private third party cycle schemes, and then your company can do it itself.
> 
> ...


----------



## sunnyjim (1 Jul 2010)

You guys have worried me enough to go check my C2W hire agreement (They use Cyclescheme, but the agreement is obviously with the employer)

It says under '_ 4.0 Salary sacrifice & hire period'_

_'At the end of the Hire Period, you will need to discuss with your Employer what is to happen to the Equipment.'_ 

That's it. I haven't agreed to any specific method for valuation, transfer, sale or anything - just that I need to talk to the company about what is to happen to the company's bike which they keep in my house. We can negotiate. 

'Fair market value' has to be seen in the context of the market into which the bike would be sold, bearing in mind we are talking about a company selling stuff unrelated to it's core business to the trade, not a consumer buying on the high street.
For many companies the normal method of disposal of well used surplus equipment bought for around £1000 a year ago would be the big skip round the back, regularly emptied by a scrappie who probably pays by the ton. 
The company doesn't go hawking any other used equipment round specialist shops or direct to consumers trying to get the best price, so 'values' in that market aren't relevant. That's my story anyway,and I'll stick to it.


----------



## shippers (1 Jul 2010)

2 thoughts.
1- how many people will have their bikes stolen half way through month 11, only to buy a very similar one off Ebay the following month?
2- I destroyed a Giant Defy 4. If anyone wants to borrow it for valuation under the bike to work scheme, just give me a shout!


----------



## Norm (1 Jul 2010)

Jezston said:


> Norm: sorry to be a pain, but don't suppose I could hassle you to answer the following?


Oops! Sorry, I thought I'd done that one yesterday. I typed an answer but, well, I'm working now so CC access is limited so I might have had a panic Alt-F4.  (I started typing this reply at about 3pm, wonder when it'll get posted)

Your employer would need to accept an invoice from you as a legitimate business supplier, subject to all the due dilligence requirements that your company has. You would need to set yourself up as a business, probably as a sole trader, and most companies would require you to issue an invoice for their asset records.

It might be easier, though, for you to buy the bits on the scheme and not charge for building. I don't think that the regs say that you need to buy a complete bike, but it does say "Eligible equipment includes cycles and cyclists' safety equipment".


----------



## Bromptonaut (1 Jul 2010)

Catrike UK said:


> The requirement of the dealer is to give a condition assessment according to Cyclescheme guidelines, A,B,C or D. I suspect now that Cyclescheme has been sold the new owners are looking at ways of making even greater profits although I cannot be sure. Giving a D rating to the bike will result in it having a much lower value.



Catrike, 

That may be the case in Cyclescheme (who I think we're using next time).But both my employer and the current HMRC guidance require the bike to be valued at the time of sale. Some employers are ignoring the HMRC guidance and may be getting away with out. Our inspector is apparently a stickler for the rules.


----------



## Riding in Circles (1 Jul 2010)

Bromptonaut said:


> Catrike,
> 
> That may be the case in Cyclescheme (who I think we're using next time).But both my employer and the current HMRC guidance require the bike to be valued at the time of sale. Some employers are ignoring the HMRC guidance and may be getting away with out. Our inspector is apparently a stickler for the rules.



Valued at time of sale after the lease period?


----------



## Panter (2 Jul 2010)

Nick_B said:


> I went back to see who's post I'd picked this up from. It was a certain Panter! The line I saw (quoting Cyclescheme) was:
> 
> "The employee can self-assess the condition of the bike using Cyclescheme simple yet comprehensive condition guide, or print off the form and take the bike to their local Partner Store for assessment."





It wasn't me, I was nowhere near it.


*strolls off whistling with hands in pockets* 

Sorry, note to self, must read own waffle before commenting on others... 




Actually, while I'm here, I thought I'd just add that if your company uses Cyclescheme, they have to opt out of them taking possession of the bike at the end.

I'm not quite sure where/when they snuck that in, last time we ran the scheme that certainly wasn't the case.
Now, nothing's changed, but it was only by a chance email that I discovered we'd opted for Cyclesheme to take the bikes at the end!

Maybe worth checking otherwise the option of free rental at the end may not even be available?


----------



## Jezston (2 Jul 2010)

Norm said:


> Oops! Sorry, I thought I'd done that one yesterday. I typed an answer but, well, I'm working now so CC access is limited so I might have had a panic Alt-F4.  (I started typing this reply at about 3pm, wonder when it'll get posted)
> 
> Your employer would need to accept an invoice from you as a legitimate business supplier, subject to all the due dilligence requirements that your company has. You would need to set yourself up as a business, probably as a sole trader, and most companies would require you to issue an invoice for their asset records.
> 
> It might be easier, though, for you to buy the bits on the scheme and not charge for building. I don't think that the regs say that you need to buy a complete bike, but it does say "Eligible equipment includes cycles and cyclists' safety equipment".



Thanks, although the admin staff at work when asked were pretty certain it has to include a complete bicycle - hence one chap at work buying an £80 BSO and about £700 on parts to upgrade his mountain bike. Which he rides on the pavement. Which is another story.

Reason I asked was because I'm looking at getting a chap who runs a very small bicycle shop near me to build me a custom bike, much of it based on old sourced parts (old reynolds frame, SA 3-speed hub etc) but he's unable to join cyclescheme because there's certain 'business' aspects of his err business he's never felt a need to getting round to doing - VAT registering, various other things etc. I'm wondering if my employers administer it themselves, they can essentially buy off anyone.


----------



## Joseph (2 Jul 2010)

Jezston said:


> Thanks, although the admin staff at work when asked were pretty certain it has to include a complete bicycle - hence one chap at work buying an £80 BSO and about £700 on parts to upgrade his mountain bike. Which he rides on the pavement. Which is another story.
> 
> Reason I asked was because I'm looking at getting a chap who runs a very small bicycle shop near me to build me a custom bike, much of it based on old sourced parts (old reynolds frame, SA 3-speed hub etc) but he's unable to join cyclescheme because there's certain 'business' aspects of his err business he's never felt a need to getting round to doing - VAT registering, various other things etc. I'm wondering if my employers administer it themselves, they can essentially buy off anyone.



Some of the HMRC guidance is here:

http://www.hmrc.gov.uk/manuals/eimanual/eim21664.htm

Essentially there's nothing to stop them, but your employer would have to be cooperative. The (only?) advantage of the various cycle2work schemes run by/for the various retailers is that they have all the paperwork sorted out.

The only other potential hurdle is that some of the schemes have an exclusivity provision, preventing your employer sourcing bikes elsewhere if they have signed up to such a scheme.

(There's absolutely no requirement for businesses turning over under ~65K to be VAT registered,)

Joseph


----------



## Bromptonaut (2 Jul 2010)

Catrike UK said:


> Valued at time of sale after the lease period?



Exactly that. See latest HMRC stuff the meat is on page 2.


----------



## Riding in Circles (2 Jul 2010)

Bromptonaut said:


> Exactly that. See latest HMRC stuff the meat is on page 2.



There is an easy solution, the employer can continue to loan the bike to the employee for free, after say 3 years they could sell it for £20, it is important to keep any original worn out components as these are part of the original cycle and it is these that it must be valued on.


----------



## Bromptonaut (2 Jul 2010)

Catrike UK said:


> There is an easy solution, the employer can continue to loan the bike to the employee for free



That's exactly what I'm doing; letting it depreciate on their books. But even then I doubt a 3yo Brompton M6R will be valued at £20. 

Suspect this scheme was set up by DfT with enthusiastic support of a then minister. Subsequent changes under prev administration lessened that support and no immediate sign that ConDem have revived it. 

HMRC therefor free to move in & kill off something that was always seen as infringing their territory.


----------



## Riding in Circles (2 Jul 2010)

Bromptonaut said:


> That's exactly what I'm doing; letting it depreciate on their books. But even then I doubt a 3yo Brompton M6R will be valued at £20.
> 
> Suspect this scheme was set up by DfT with enthusiastic support of a then minister. Subsequent changes under prev administration lessened that support and no immediate sign that ConDem have revived it.
> 
> HMRC therefor free to move in & kill off something that was always seen as infringing their territory.



HMRC did whinge about it from the start so I suspect you are correct.


----------



## DrSquirrel (2 Jul 2010)

The government set up this scheme and basically suggests that you can buy it.

But they're (companies) are not allowed to suggest this else it would be hire purchase.

Why couldn't the government just setup this scheme so it could be sold at the end regardless, isn't that the point of the scheme anyway. It just seems like we are using a loophole that is already there (yes I know this isn't entirely true).

I would just ask the shop to try and mark it a bit lower.

Or just avoid cyclescheme.co.uk all together.

Or keep it on the employer for as long as possible for free (as others have mentioned) so it depreciates. (which isn't always an option with cyclescheme apparently, or isn't default).


Moral of the story - cyclescheme(.co.uk) is pants.


----------



## sheva (2 Jul 2010)

My C2W finished two weeks ago (not cyclescheme) and my employer has simply stopped taking any payment but has not yet made any suggestions about what happens next.


----------



## Downward (4 Jul 2010)

Mine is up again in about a month via Cyclescheme so will be interesting to see what happens.

I won't be taking it to a LBS though to get it assessed as it's at my time and my expense.


----------



## summerdays (4 Jul 2010)

Downward said:


> Mine is up again in about a month via Cyclescheme so will be interesting to see what happens.
> 
> I won't be taking it to a LBS though to get it assessed as it's at my time and my expense.



So you would rather that Cyclescheme assessed it's value - its in their interests to assess it's value as high as possible I would presume - whereas at least the bike shop don't have a vested interest in keeping the value high.


----------



## Norm (4 Jul 2010)

If what people are writing here is correct (and there's a big "if") I can't believe, or understand, how many companies have outsourced the whole thing to cyclescheme. And, even worst, they have sold the bikes to cyclescheme.

Prime way to turn an incentive into a disincentive, IMO.


----------



## DrSquirrel (4 Jul 2010)

Norm said:


> If what people are writing here is correct (and there's a big "if") I can't believe, or understand, how many companies have outsourced the whole thing to cyclescheme. And, even worst, they have sold the bikes to cyclescheme.
> 
> Prime way to turn an incentive into a disincentive, IMO.



Makes the whole thing more complicated than just doing it your(company)self too.


----------



## Downward (4 Jul 2010)

After talking to Cyclescheme many times (we are tendering for new Cycle 2 work scheme) there is no way they are going to start charging full market value for the bikes at the end of the loan scheme because as they say they wouldn't last 18 months.


----------



## Norm (4 Jul 2010)

Downward said:


> ...(we are tendering for new Cycle 2 work scheme)....


Save your company time, effort and money - go DIY.


----------



## Joseph (4 Jul 2010)

Downward said:


> After talking to Cyclescheme many times (we are tendering for new Cycle 2 work scheme) there is no way they are going to start charging full market value for the bikes at the end of the loan scheme because as they say they wouldn't last 18 months.



Well if they're not then there's tax to be paid on the difference between full market value and what the bike gets sold to you for and the under-value transaction will have to be reported as a benefit on the employees P11D.... (assuming ownership is transferred to the employee at the end of the lease period)

[see http://www.hmrc.gov.uk/manuals/eimanual/EIM21667.htm ]

As other folks have said, the simplest path seems to be to leave ownership in the company and continue to lend the bike to the employee tax free.


----------



## GrasB (4 Jul 2010)

Downward said:


> After talking to Cyclescheme many times (we are tendering for new Cycle 2 work scheme) there is no way they are going to start charging full market value for the bikes at the end of the loan scheme because as they say they wouldn't last 18 months.





Joseph said:


> Well if they're not then there's tax to be paid on the difference between full market value and what the bike gets sold to you for and the under-value transaction will have to be reported as a benefit on the employees P11D.... (assuming ownership is transferred to the employee at the end of the lease period)
> 
> [see http://www.hmrc.gov.uk/manuals/eimanual/EIM21667.htm ]
> 
> As other folks have said, the simplest path seems to be to leave ownership in the company and continue to lend the bike to the employee tax free.



When I sold my rallying Cinq I had 2 options
1) sell it for about £1500-£2000 & get a buyer fairly quickly.
2) be patient & wait but get about £3500-£4000.
I had many offers around the the lower 'quick sale' mark because they wanted it as a road car but I held out for 7 months to sell it at my full asking price to a buyer who fully understood what I had done to the car. So which was the full market value? Both really, the first was the value someone in the modded car market would pay for a rally-esque car, the other was the value to someone who wanted a fully preped class legal rally car.

The same thing with cyclescheme, they've got to store & sell the bikes on, so sure they could get more money for them but how long will they have to store those bikes, advertise them etc.? Do they charge a lower value for a quick sale & realise an instant monetary value for the bike or maximise the value of that asset but sit on it for months before they sell it with all the costs that are involved? If they say that they'd go under in 18 months if they did offer the bike as 'full market value' then that value is basically a load of hype!


----------



## Joseph (4 Jul 2010)

GrasB said:


> The same thing with cyclescheme, they've got to store & sell the bikes on, so sure they could get more money for them but how long will they have to store those bikes, advertise them etc.? Do they charge a lower value for a quick sale & realise an instant monetary value for the bike or maximise the value of that asset but sit on it for months before they sell it with all the costs that are involved? If they say that they'd go under in 18 months if they did offer the bike as 'full market value' then that value is basically a load of hype!



I don't think anyone has suggested they should value them on the basis of the absolute maximal achievable sale price. A reasonable definition of 'market value' is the value that can be achieved by selling it in the short term. ebay or what second hand dealers are selling them for would provide some guidance.

It is going to depend on the type of bike of course, but I'd imagine most of the bikes going through the cycle schemes are mass produced models, hence it should be relatively simple to determine a "fair" market price. But "give it to me for a tenner as otherwise you'll have to pay someone else to dispose of it" is clearly not going to go down well with any HMRC inspector  - equally from what I remember HMRC have indicated that selling all the bikes at a fixed 5% or 10% of original price is not acceptable.

(And any statement from cyclescheme that they're not going to charge market value is clearly going to grab some attention from HMRC!)


----------



## Downward (4 Jul 2010)

Well as Cyclescheme is just office based to take physical ownership of the bikes would mean them investing in secure storage and arranging collection of thousands of bikes from thousands of locations (esp as most users are councils, hospitals which trying to find a in person is very difficult).



Would anyone know how much it would be to hire a vehicle and driver to transport cycles ?

I know 4000 fully loaded pallets is about £20k


They offer 2 options, You buy it or you pay for it to be disposed off. 

Why would they suddenly charge full market value when they have made their 10% at the point of sale ?
£100 per £1000 worth of sales ain't a bad profit for a bit of paperwork.

Even if they charge 10% for Market Value then they are creaming 20% per sale.


----------



## Joseph (4 Jul 2010)

Downward said:


> Well as Cyclescheme is just office based to take physical ownership of the bikes would mean them investing in secure storage and arranging collection of thousands of bikes from thousands of locations (esp as most users are councils, hospitals which trying to find a in person is very difficult).



I'd imagine their are plenty of firms around who would offer to take care of all that for cycle scheme.



> Why would they suddenly charge full market value when they have made their 10% at the point of sale ?


Yes, it's completely common for directors of companies to give away potential profit just out of the goodness of their hearts. Absolutely zero companies are run by money grabbing immoral almost-liars. 

More to the point, if you don't pay a fair market value, HMRC can come and tax you on the difference between what you paid and a fair market value - iirc this would also result in a fine for the company if they failed to report it on the P11D.


----------



## GrasB (4 Jul 2010)

Joseph said:


> I don't think anyone has suggested they should value them on the basis of the absolute maximal achievable sale price. A reasonable definition of 'market value' is the value that can be achieved by selling it in the short term. ebay or *what second hand dealers* are selling them for would provide some guidance.


Most certainly NOT! As bikes much over £250 second hand dealers aren't shifting quickly, around here at least. They are set up to store a large number of bikes securely have insurance etc. Those costs don't change regardless of the bikes value so they'll be more willing to hold into a bike & charge more.

Ebay isn't a great indicator for a business either as you've got to look into collection & storage costs etc.


----------



## Joseph (4 Jul 2010)

GrasB said:


> Most certainly NOT! As bikes much over £250 second hand dealers aren't shifting quickly, around here at least. They are set up to store a large number of bikes securely have insurance etc. Those costs don't change regardless of the bikes value so they'll be more willing to hold into a bike & charge more.
> 
> Ebay isn't a great indicator for a business either as you've got to look into collection & storage costs etc.



ebay is exactly the kind of indicator HMRC will look for when deciding the "value" of the "benefit" obtained by gaining ownership of the bike - ie. how much would it cost you to buy the same bike in the same condition today?

If cyclescheme sell the bike to you for less than that, then that's up to them - but tax is due on the difference between the market value and what you pay cyclescheme / your employer.


----------



## Norm (4 Jul 2010)

Downward said:


> After talking to Cyclescheme many times (we are tendering for new Cycle 2 work scheme) there is no way they are going to start charging full market value for the bikes at the end of the loan scheme because as they say they wouldn't last 18 months.





Joseph said:


> Well if they're not then there's tax to be paid on the difference between full market value and what the bike gets sold to you for and the under-value transaction will have to be reported as a benefit on the employees P11D.... (assuming ownership is transferred to the employee at the end of the lease period)





Joseph said:


> More to the point, if you don't pay a fair market value, HMRC can come and tax you on the difference between what you paid and a fair market value - iirc this would also result in a fine for the company if they failed to report it on the P11D.


This is an interesting point (to the nerds ), because cyclescheme is a third party. 

If your employer outsources ownership of the bikes to cyclescheme, they can, in theory, sell them on for any price without tax implications. It could be argued that it's no different to going to your LBS and picking up a Billy Bargain. As long as the transaction between your employer and cyclescheme could be shown to have happened at arm's length - so there should be no contractual requirement for cyclescheme to sell the bikes cheaply.


----------



## Joseph (4 Jul 2010)

Norm said:


> This is an interesting point (to the nerds ), because cyclescheme is a third party.
> 
> If your employer outsources ownership of the bikes to cyclescheme, they can, in theory, sell them on for any price without tax implications. It could be argued that it's no different to going to your LBS and picking up a Billy Bargain. As long as the transaction between your employer and cyclescheme could be shown to have happened at arm's length - so there should be no contractual requirement for cyclescheme to sell the bikes cheaply.



That is indeed an angle I hadn't considered - so the contract change that started this thread could be a cunning move by cyclescheme to try and avoid a tax nasty.

The question then is - is that tax evasion, or tax avoidance? One is legal, one isn't (and could well result in a nasty tax bill)


----------



## spen666 (4 Jul 2010)

LOGAN 5 said:


> ...and where does it leave anybody who paid cash to the retailer for a more expensive bike above the £1000 voucher when it comes to valuing it at "Full Market Value" For example, a £2000 bike (having paid £1000 in cash direct to the retailer) would probably be worth around £800 after a year which would be a silly amount to have to pay back after the monthly payments and the initial payment to the bike shop!



By making a payment in the manner you have so done, the purchase is outside the C2W scheme and not eligible for tax savings


----------



## Downward (4 Jul 2010)

Joseph said:


> That is indeed an angle I hadn't considered - so the contract change that started this thread could be a cunning move by cyclescheme to try and avoid a tax nasty.
> 
> The question then is - is that tax evasion, or tax avoidance? One is legal, one isn't (and could well result in a nasty tax bill)



But Cyclescheme do take ownership of the bikes from the employee.

I posted last year when I had an invoice from Cyclescheme asking me for £40 to take ownership of my bike.

Thus Cyclescheme actually making 15% per sale of a bike via Cyclescheme.

If now they follow HMRC and charge full Market Value then it will be more like 40%. Then how many of your average employees are going to pay 120% of the actual cost of the bike ? Word will get around pretty quick that the scheme will cost you more than the bike costs.


----------



## Norm (4 Jul 2010)

Downward said:


> But Cyclescheme do take ownership of the bikes from the employee.


Not necessarily. I think (although it could be considered hearsay, it certainly isn't scientific) that most companies which use cyclescheme retain the ownership themselves.


----------



## Downward (4 Jul 2010)

Norm said:


> Not necessarily. I think (although it could be considered hearsay, it certainly isn't scientific) that most companies which use cyclescheme retain the ownership themselves.



Well our company don't and we are going under the framework that was awarded to Cyclescheme to provide the cycle to work agreement that runs through the public sector.


----------



## rushandy (5 Jul 2010)

I work in the public sector (police staff) and from the FAQs our HR department have provided us with it looks as though the employer retains ownership at the end of the scheme.


----------



## Bromptonaut (5 Jul 2010)

OK just for devilment let's look down the telescope the other way. 

As posted above I'm a civil servant with a year old C2W Brompton M6R. I'm presently letting it depreciate while still on HMG's books. Lets say in two years time it's market value is assessed at £200. What's to stop the employer giving it to me and putting £200 on the P11D. I pay the £40 tax on that (I'm taxed at basic rate) and everybody's happy. 

Or am I missing something????


----------



## Joseph (5 Jul 2010)

Bromptonaut said:


> OK just for devilment let's look down the telescope the other way.
> 
> As posted above I'm a civil servant with a year old C2W Brompton M6R. I'm presently letting it depreciate while still on HMG's books. Lets say in two years time it's market value is assessed at £200. What's to stop the employer giving it to me and putting £200 on the P11D. I pay the £40 tax on that (I'm taxed at basic rate) and everybody's happy.
> 
> Or am I missing something????



No, I think you've got it. Your employer will also have to pay employers national insurance contributions on the £200. The NI system is tortuous, but I believe it'd be 12.8% - so £25.60.

So, as long as £200 is a fair market value, your employer is happy to gift the bike, sort out the paperwork and pay the NI, and you're happy paying the tax, then everything is sorted and the tax man will be happy they've had their piece of the cake.

Of course, I believe current trends require that we now get all upset about the government considering giving a civil servant a 200 quid brompton for nothing and have a quick rant about our tax dollars being wasted  Though I can't say I see any problem with it, seems like one of the better uses of taxpayer's money.

Joseph


----------



## 2Loose (8 Jul 2010)

Errrm, having just completed my 12 months payments and awaiting for news of a final payment amountvaluation...<drum roll> my bike was stolen last night <boo hiss>.
Couldn't happen at a worse time (if any times are better than others) of course.

The insurance company will deal with the claim but does anyone have a clue as to how on earth CycleScheme will deal with final valuation now? At this stage in the process I am awaiting news of what the replacement will be, but with the insurance excess to pay potentially on top of a 'final valuation' on a bike I no longer have...I think it may be a bit awkward. Obviously I'll let you all know how things progress as I feel 'in a grey area' with this stuff. Not exactly happy at the moment either as you can imagine.


----------



## gb155 (8 Jul 2010)

Norm said:


> Not necessarily. I think (although it could be considered hearsay, it certainly isn't scientific) that most companies which use cyclescheme retain the ownership themselves.




Yeah mine do (Local Authority)


----------



## g00se (8 Jul 2010)

2Loose said:


> Errrm, having just completed my 12 months payments and awaiting for news of a final payment amountvaluation...<drum roll> my bike was stolen last night <boo hiss>.
> Couldn't happen at a worse time (if any times are better than others) of course.
> 
> The insurance company will deal with the claim but does anyone have a clue as to how on earth CycleScheme will deal with final valuation now? At this stage in the process I am awaiting news of what the replacement will be, but with the insurance excess to pay potentially on top of a 'final valuation' on a bike I no longer have...I think it may be a bit awkward. Obviously I'll let you all know how things progress as I feel 'in a grey area' with this stuff. Not exactly happy at the moment either as you can imagine.



The cyclescheme website says:

"If the bike is stolen the employee will be liable for any outstanding monies without any tax exemptions, so it's very important that employees insure the bikes."

(by the way, that's why you must have decent insurance including new for old).

Officially, it sounds like you won't have to pay a final valuation.


----------



## ramses (8 Jul 2010)

I e-mailed them a little while ago (couple of weeks) and this is what I got in response:

Dear Richard,

Further to your email regarding Cyclescheme, I would like to advise you that once the hire agreement has elapsed (12 months from the date in which you have redeemed the voucher at a bike store) you will be contacted by your employer or Cyclescheme depending on who your employer is. You will then be offered the chance to transfer ownership of the bike to yourself in the form of a final Fair Market Value payment. Historically, this value has tended to be around 5% (+ VAT) the original cost of the bike and accessories. The 12 months hire agreement is a hire agreement (as opposed to a hire purchase agreement which typically has interest) paid by payments from your gross salary so instead of the attached tax and NICs going to central government it is actually being used to pay for your bike. On top of this, you potentially also made VAT savings which once again depends on who your employer is.

I trust to have answered your question fully with the above information, but if you require any further guidance, please visit our website at www.cyclescheme.co.uk where you will find in-depth details and FAQs regarding many more aspects of the scheme.

Best wishes from the team at Cyclescheme!


----------



## DrSquirrel (8 Jul 2010)

Can Cyclescheme (the company) say that you _will be_ offered to transfer ownership?

As the government in C2W guidelines states that your company must not suggest that they will, only that they might - otherwise it's considered a hire purchase and is not covered in the C2W scheme.


----------



## 2Loose (8 Jul 2010)

g00se said:


> The cyclescheme website says:
> "If the bike is stolen the employee will be liable for any outstanding monies without any tax exemptions, so it's very important that employees insure the bikes."
> ...
> Officially, it sounds like you won't have to pay a final valuation.



Cheers G00se, as they have had their 12 months worth all ready, I hope you are correct. The final payment can go towards my excess...a small silver cloud, I mean 'lining' of course.


----------



## dubman (10 Jul 2010)

Well i took the bike in for assessment yesterday , and im pleased to report it took all of 30 seconds and was marked as category D  Just have to wait on the final value now.


----------



## Pdoodle (13 Jul 2010)

I bought my bike from a shop 100+ miles away as they were the only ones who could get hold of the particular model I wanted. My company now want me to take it back to this shop to get it valued, what a pain for a 30 second inspection. Could I complete the BCAF1 form myself on behalf of the LBS ?	Does the bike shop need to keep any records of the valuation ?


----------



## 2Loose (14 Jul 2010)

A colleague just got his final valuation on his Trek 6500, which had admittedly been used all year round and collected a D rating at the shop. 
Final amount just under 50 quid, so it appears that there is not necessarily anything to be overly concerned about as that is just over a monthly payment.


----------



## summerdays (14 Jul 2010)

If that's the case - will it will be those with summer bikes who will be hardest hit ... especially if they have polished it after every outing?


----------



## Jezston (14 Jul 2010)

Again, what if my bike gets stolen and replaced a few days before the inspection? Is it fair to get a valuation on a brand new bike? Why then I'd be better off not buying it off them. What then?

This is all bullshit.


----------



## 2Loose (14 Jul 2010)

Jezston said:


> Again, what if my bike gets stolen and replaced a few days before the inspection? Is it fair to get a valuation on a brand new bike? Why then I'd be better off not buying it off them. What then?
> 
> This is all bullshit.



My experiences match these exact conditions - it was stolen a week ago while waiting for the final valuation. The insurance are replacing it, but there is no longer a cyclescheme valuation required as the bike cannot be transfered into my name anymore as it is lost. My employer\cyclescheme already had the 12 monthly payments so contractually I have completed all that is required. 

The replacement will be all mine!


----------



## 2Loose (14 Jul 2010)

Scrap what I wrote about my colleagues 50quid valuation, it turns out that my employer honoured the original 5% guess-timate and ignored the D valuation... 

The worry is how new scheme users willl be treated so it will be interesting to see how others get on with their valuation amounts.


----------



## benb (14 Jul 2010)

This is all fascinating. I think an aspect that hasn't been thought about is how employees are possibly being mislead.

The scheme (unfortunately run through cyclescheme, boo) on my intranet says "The scheme allows staff to take advantage of National Insurance and Income Tax savings (through salary sacrifice), which results in savings of between 33% and 40% on the original purchase price of a cycle" and it has examples of bikes, with a £845 bike specifically saying it has a fair market value of £24. 

My bike was £799, and if at the end of the scheme I was lumped with a FMV payment of £400, I feel that I would have some comeback on being mis-sold the scheme due to the heavy implication of a nominal FMV.

Even the cyclescheme website only says "Please note :A Fair Market Value payment *may *be payable upon cessation of the agreement or at the end of the lease period" (my bold)

There's also NHSBikes which states "The loan period is 12 months and at the end of it the employee is offered the option of either buying or returning the bicycle for a nominal payment (typically 10% of the value)"

Now from what has been said above, this is not true, but as an employee you surely have some recourse if you have been mislead about the terms.


----------



## sunnyjim (14 Jul 2010)

benb said:


> This is all fascinating. I think an aspect that hasn't been thought about is how employees are possibly being mislead.
> 
> The scheme (unfortunately run through cyclescheme, boo) on my intranet says "The scheme allows staff to take advantage of National Insurance and Income Tax savings (through salary sacrifice), which results in savings of between 33% and 40% on the original purchase price of a cycle" and it has examples of bikes, with a £845 bike specifically saying it has a fair market value of £24.
> 
> ...



I'd certainly take that approach if they gave me the option of handing it back or buying it from them for anything like what I'd pay on the high street for a 1 year old bike in good nick . 

More likely, the issue is that if the employer gives or sells you something worth £400 for £50, it's a benefit in kind, so taxable. 

This is what HMRC are getting at. If the bike 'fair market' value is a significant % of the total lease payments, then a large part of the tax 'savings' over the year can be recovered. 

The whole scheme is based on exploiting a tax loophole - and if it works for bikes, what's to stop it working with white goods or anything else classed as a 'wasting asset' ? I can see why HMRC would want to make it look less attractive.

However I do like the idea of reporting the DFT to the OFT for misleading punters because HMRC had pulled the plug. Joined-up government.


----------



## 2Loose (14 Jul 2010)

Just received more clarification from my colleague who was asked for 5% of the pre-tax price of his bike.
On top of the £50, He has also been asked the condition of his bike so that they can ascertain the proper value, in which case he will be asked to pay the tax on the 'proper' value. Just the tax.

So, an arbitrary amount PLUS the tax that HMRC should receive on the proper valuation if there is a difference, instead of paying the full amount of a proper valuation and having HMRC extract the tax from that.
Say its realistic resale value is 350quid, then in essence he pays his 50quid + 17.5% of 350quid (£61.25?) = 111.25 final payment altogether, which is about 2 months payments in total.

Sounds sensible, he still makes savings, HMRC get their proper tax cut and everyone is happy and above board. I am not sure if this is just the way my employers are handling this, but it seems fair to me...


----------



## sunnyjim (14 Jul 2010)

2Loose said:


> Just received more clarification from my colleague who was asked for 5% of the pre-tax price of his bike.
> On top of the £50, He has also been asked the condition of his bike so that they can ascertain the proper value, in which case he will be asked to pay the tax on the 'proper' value. Just the tax.
> 
> So, an arbitrary amount PLUS the tax that HMRC should receive on the proper valuation if there is a difference, instead of paying the full amount of a proper valuation and having HMRC extract the tax from that.
> ...



It's income tax, not VAT we're talking about, so 20%[sup]*[/sup] on the 'free' benefit, in this case 350-50=300 * 0.2 = £60 + the £50.

* or, if a  rich bastard  higher rate taxpayer, 40% 

It still means reality doesn't match the brochure.


----------



## 2Loose (14 Jul 2010)

Yeah ok, income tax not vat, also excuse my maths, but the principle is sound.
Far better than some of the other possibilities that have been imagined over the last couple of months anyway. 
Ultimately, money has still been saved over the year, but some of the imagined possibilities were quite painful to contemplate


----------



## g00se (14 Jul 2010)

Jezston said:


> Again, what if my bike gets stolen and replaced a few days before the inspection? Is it fair to get a valuation on a brand new bike? Why then I'd be better off not buying it off them. What then?
> 
> This is all bullshit.



If a cyclescheme bike is nicked - you need to pay back the outstanding payments but you also need to pay the tax and NI on those final payments too. Hence the need to have it insured. I remember your bike was stolen a while back - did you inform your employer? If not, you'll have to go mountain biking with the new one the day before the evaluation - if your firm asks a bike shop to value it


----------



## Theseus (14 Jul 2010)

Just to play the  advocate for a moment ...

Do Cyclescheme know what bike you got through the scheme?
Say you have a number of bikes in the shed, as we all do, right!. Now one of them, the summer road bike, is the one you got on the scheme. You also have a winter hack that is about a year older and has been well (ab)used. Who can say which was which at valuation time?

When I got my C2W bike all the scheme providers (Halfords) knew was that they were issuing me with a letter of collection. I have found out that we are not really in the government scheme, we have something else going on that I don't fully understand. Just that at the end of the period (3yrs) it just ends with no final payment.


----------



## sunnyjim (14 Jul 2010)

Touche said:


> Just to play the  advocate for a moment ...
> 
> Do Cyclescheme know what bike you got through the scheme?
> Say you have a number of bikes in the shed, as we all do, right!. Now one of them, the summer road bike, is the one you got on the scheme. You also have a winter hack that is about a year older and has been well (ab)used. Who can say which was which at valuation time?
> ...


----------



## mcshroom (14 Jul 2010)

I know my lbs took the frame number so they'd probably know


----------



## rogersavery (14 Jul 2010)

Can someone explain to me how the cyclescheme works? It sounds like you could end up paying for the bike at more that full price

ie choose a bike for £1000
company buys the bike
you pay £1000/13=£76.92 from your salary before tax and ni for 12 months ie £923.07
then you pay the market value at the end of the 12 month term - for example say it loses 50% of its value £500

total paid for a £1000 bike is £1423.07

it doesn't make sense


----------



## benb (14 Jul 2010)

I've also just found another document on our intranet, with both my organisation's logo and the cyclescheme one (so not obvious where it's from) that specifically says the final FMV payment will be 2.5%. So I'm going to refuse to pay more than that if it comes to it on the grounds of misleading advice.

Still I've got another 10 months to see what happens.


----------



## rogersavery (14 Jul 2010)

If have just spoke to cyclescheme 

they have just been given guide lines from the hmrc as to the value for the different catagories depending on the initial purchase price

catagory A on a £1000 bike is £200 + VAT

the catagories are supposed to be self assesed, so I am not sure why the original poster has to take it back to a shop

The whole scheme is silly and ill conceived - hmrc has introduced a set of rules for the scheme, to bypass existing rules that they have complete control over

ie the only reason you hire the bike and then have to buy it is to avoid is being classified as 'benefit in kind', so you end up with an overly complicated scheme, with the employee not really having much clue as to what the total cost of the bike is going to be to them at the end of 12 months

why don't the hmrc simply change the rule to say a company buying a bike for an employee and allowing it to be payed for over 12 months before tax and ni is not considered to be benefit in kind


----------



## amnesia (14 Jul 2010)

No way am I paying 40% on the value of my bike at the end of the year... I only paid 5% last year, and pretty sure that was the contract I signed this year.

Apart from that, EVERYONE knows that carbon frames decompose after 12 months and a day, so it won't be worth squat


----------



## crankyhorse (14 Jul 2010)

I can't see many employers wanting to get lumbered with a job lot of used bikes. This will be a storm in a tea cup.


----------



## potsy (14 Jul 2010)

rogersavery said:


> Can someone explain to me how the cyclescheme works? It sounds like you could end up paying for the bike at more that full price
> 
> ie choose a bike for £1000
> company buys the bike
> ...



As I understand it you are only hiring the bike from your employer,at the end of the hire scheme you have the option to buy it from them,but if things go as they seem to be then it could end up cheaper to just buy one yourself on 0% finance if you can.


----------



## rogerzilla (14 Jul 2010)

So...if HMRC tried to go for the back tax retrospectively, how could they tell what condition my bike was in as at 31 December 2009? They couldn't. If you took a £1000 tourer and rode 2,500 miles of commuting (half of it on country lanes) without cleaning or maintaining it much, all the drivetrain would be shot, the tyres would be worn out, it would have a bit of rust and maybe it would only be worth £100.


----------



## Downward (14 Jul 2010)

Ok.
You get your bike from the LBS through Cyclescheme.

Good for CS, LBS and you.

You take back said bike to LBS for final valuation.

It's unlikely and bad business for the LBS to rate your bike as A1 condition perfect lumbering you with a hefty bill to pay to take ownership. If this does happen there will be a lot of people that won't use the scheme and word will soon get around your company not to use either Scheme or LBS.

And as stated above, I wanted Bike X 2009 model for £1k. By the time the admin was all done it's late august and the 2010 bikes are out. The £1k bike turns into a nice shiny 2010 £775 model with £225 going towards some nice new clothing, shoes, spds and helmet. The voucher though states Bike X costing £1k.

I'm sure my LBS will be more than accommodating in the valuation as I have spend nearly £2k with them over the past 2 years.

Also would it be fair for you to be penalised against the next person for looking after your bike ?


----------



## JoysOfSight (15 Jul 2010)

Guys, 

I took the liberty of cross-posting some of this chat onto a new thread on the CTC site. It now includes a direct response from Cyclescheme to the effect that you won't get shafted (for more than RRP) on a scheme bike.

Might still be bad news for any saving, but it means at worst you're getting interest free credit.

Hope that helps.


----------



## 2Loose (15 Jul 2010)

JoysOfSight said:


> Guys,
> 
> I took the liberty of cross-posting some of this chat onto a new thread on the CTC site. It now includes a direct response from Cyclescheme to the effect that you won't get shafted (for more than RRP) on a scheme bike.
> 
> ...



Ta for the reassuring info. link: Cyclescheme assurance


----------



## rogersavery (15 Jul 2010)

JoysOfSight said:


> <br>I took the liberty of cross-posting some of this chat onto a new thread on the CTC site. It now includes a <a href="http://forum.ctc.org.uk/viewtopic.p...422e8cf4e76c7cf1c7aa15db&amp;start=30#p318019" class="bbc_url" title="External link" rel="nofollow external">direct response from Cyclescheme</a> to the effect that you won't get shafted (for more than RRP) on a scheme bike.<br>


<div>Except cyclescheme have no authority to promise that, they have to conform to guidance from hmrc</div><div><br></div><div>yes cyclescheme are correct in that the current guidence from hmrc will mean that you wont get shafted for more than the rrp - however hmrc can issue revised guidence anytime they like, so starting the scheme today is no guarantee that the guidance in 12 months time will be 50% depreciation

</div>


----------



## potsy (15 Jul 2010)

That's good to know,but the main draw of the scheme is getting a fabulous bike for 60% of it's true value,interest free credit can be got at a few places without the restrictions on bike/price etc.


----------



## sunnyjim (15 Jul 2010)

So from:

_"Typical savings are between 40% and 50%"_

We've gone to 

_" the salary sacrifice payments and the market value payment will never exceed the original retail price of the bike. "_

Where 'original retail price' is significantly more than 'best deal price for the same bike on the high street'

I think we can say the scheme is well and truly dead.


----------



## jig-sore (15 Jul 2010)

my company has just opened their cycle to work scheme

and i quote from the scheme providers website...



> *http://Transfer of Ownership*
> The anticipated fair market value at the end of the hire term is £20-£25 *plus Vat *or 5-7% of the LoC value *plus Vat*, whichever is greater. This is subject to a separate agreement once the hire term has ended.



i take this to mean you pay VAT on the £20/£25 or the 5-7% NOT the full price of the bike/LoC ??


----------



## rogersavery (15 Jul 2010)

I think the word 'anticipated' should be in caps and bold, it is no guarantee of what the cost of buying the bike will be.

And it is actually contrary to the latest guidelines from HMRC


----------



## Downward (15 Jul 2010)

Well I won't be using Cyclescheme again

Intrest Free and a good deal on a bike seems a safer option


----------



## puglord (22 Jul 2010)

ok guys....i've read up to about page 8 or 9 of this thread and thought i'd share my experience with you.

Our company started the C2W scheme with cyclescheme last July and just under 1700 people signed up.
We too have had the forms sent out to get the cycle condition graded A-D.
What we have worked out is that Condition A = 20%, B = 15%, C = 10% & D = 5%........these figures are based on the voucher price not bike cost if you added to the £1000 limit.

So if you got a cycle worth £500 and its graded D you pay 5% of £500 + vat = £25 + vat
If you got a cycle worth £1000 and its graded D you pay 5% of £1000 + vat = £50 + vat
If you decided to pay extra yourself above the £1000 limit and got a cycle worth £1500 and its graded D you still pay 5% of £1000 + vat = £50 + vat

So you wont be paying more than the actual value of the bike when new, but also you wont be making the saving we all thought we would get like what has happened in previous year (ie 5% regardless of condition)


----------



## 2Loose (22 Jul 2010)

So in essence, this still seems to be 12 monthly payments and at a grade D valuation, another months payment on top or there abouts. 
Which is still not bad at all imo, with a good saving still to be made, especially as my employers always banded about the 5% figure as a final payment anyway.


----------



## lindleyjoe (22 Jul 2010)

Has anyone clarified whether it is self assessment or has to be done by the shop in which it was bought? Is there anything to stop you making the bike look really scruffy to influence the assessment. I accidently spilt some emulsion paint on my bike yesterday due to my overly cramped shed. I was going to clean it off but mybe I should leave it?


----------



## 2Loose (22 Jul 2010)

lindleyjoe said:


> Has anyone clarified whether it is self assessment or has to be done by the shop in which it was bought? Is there anything to stop you making the bike look really scruffy to influence the assessment. I accidently spilt some emulsion paint on my bike yesterday due to my overly cramped shed. I was going to clean it off but mybe I should leave it?



Self assessment is definitely acceptable. a b c d e.


----------



## crumpetman (22 Jul 2010)

Surely it is in the interest of the bike shop to assess the bikes at the lowest value? If they didn't would you use them again for your next c2w bike?


----------



## Downward (23 Jul 2010)

What happens if you buy a £700 bike and £300 accessories ?

Surely you don't pay the Market value of £1k for a £700 bike ?


----------



## Bromptonaut (23 Jul 2010)

2Loose said:


> Self assessment is definitely acceptable. a b c d e.




Do you have a link to the HMRC guidance on self assessment?


----------



## 2Loose (23 Jul 2010)

Bromptonaut said:


> Do you have a link to the HMRC guidance on self assessment?



It is Cycleschemes guidance on self assessment being discussed, rather than HMRC's. 
I guess HMRC don't care as long as they get their tax cut on any benefit in kind. 

The guidance passed on to us via my employee is cut and pasted below. It does not give an actual figure, but someone previously mentioned that Cyclescheme appears to have a generic formula to work out value based on the cost of the bike and the condition assessment, e.g Cat1=20% of cost, Cat2=15%, Cat3=10% etc. which I find very believable.


----- excerpt from our correspondence.

*To assess any taxable benefit we need to establish your cycle’s fair market value. In order to do this would you please consider the following categories and let me know which category your cycle would fall into. You can, if you wish, indicate that it falls between two categories, e.g. between 3 & 4 or 4 & 5. 

Category 1: 
A cycle barely or never used since rolled out of the showroom. 

Category 2: 
A cycle that has been ridden regularly but infrequently to and from work throughout the hire period. Predominantly used on the road or cycle paths for short distances. 

Category 3: 
A typical commuter’s cycle that has been used regularly and frequently, excellently maintained and serviced, been cleaned and lubricated throughout the hire period. Some leisure use has occurred. 

Category 4: 
A cycle that has been regularly used for commuting all year round, maintained to a fair standard. It has been used regularly for leisure that may have included off-road riding. 

Category 5: 
A cycle that has been used frequently for commuting & leisure, maintained with the minimum necessary care. Large mileages would have accumulated on the cycle and a reasonable percentage of these may have occurred off-road. *_

When you give me have this information I will be able to let you know what the fair market value is and whether you may have to pay some extra tax. I will also let you know the arrangements for payment of the purchase price. *
*_
If you decide not to take up the offer to purchase the cycle please contact me to make arrangements for it to be returned to xxxxxxxxxxxxxxxxxxxxx. 

I hope that the scheme has worked well for you, enabling you to cycle more, reduce your carbon footprint and feel healthier. 

If you have any questions on anything above, please do contact me.


----------



## crumpetman (23 Jul 2010)

Downward said:


> What happens if you buy a £700 bike and £300 accessories ?
> 
> Surely you don't pay the Market value of £1k for a £700 bike ?



As I understand it is done on the voucher value not the bike itself. Otherwise you could get a bike for £250 and then £750 of "accessories" (garmin, expensive lights, ipod even) but as most people have found out, the final payment is a nominal amount.


----------



## bad boy (23 Jul 2010)

Hi all,

I have read this with must interest and concern as I have a bike on the scheme.

I popped in to my lbs today and had a chat with them about it and predictably everything is going down as a D and this amounts to 5% (from them anyway). What they did say was the margin they take from the sale has not gone up.

Its a storm in a tea cup, in reality for most this will not affect the final value figure we pay but I do understand why the documentation has been firmed up etc. Cyclescheme.co.uk is not completely stupid they would go bust in a matter of months if the reality is we are paying near enough full market value for these bikes, and they know that. 

I would urge people not to worry I do agree with Norm completely and don't use them if you can (set up your own) unfortunately I work in local government and they won the tender so I have no choice but as a tax free incentive its still a really good scheme in general.

I would say there are hundreds of new scheme commuters in my authority and speaking to the shop the amount of newbies coming in for the full works from other local authorities is huge so it does act as a massive incentive to get into cycling so long may it continue in my mind.


----------



## BenScoobert (23 Jul 2010)

My contract says, *see the bold*

11. Your obligations to return the Goods to Us
11.1.
At the end of the Hire Period, You must immediately return the Goods to Us at Your own expense to such address in the United Kingdom as We reasonably specify. This
may be to Our address, to the Suppliers address* or if We decide *(or where We are leasing them from someone else to supply them to You, the owner decides)* to sell
them,* (where appropriate)* to the buyer.* In each case, You must ensure that they are packed properly and securely and sent with all freight and insurance paid. The
Goods must be returned to Us in the condition required by clauses 6.1, 6.2, 6.5, 6.6, 6.8, 6.11 and. 7.1

At our work the final value fee is usually the same as one monthly payment, ie 5%

I asked people who used it in previous years and thats what happened


----------



## 2Loose (24 Jul 2010)

bad boy said:


> I popped in to my lbs today and had a chat with them about it and predictably everything is going down as a D and this amounts to 5% (from them anyway). What they did say was the margin they take from the sale has not gone up.
> 
> Its a storm in a tea cup, in reality for most this will not affect the final value figure we pay but I do understand why the documentation has been firmed up etc. Cyclescheme.co.uk is not completely stupid they would go bust in a matter of months if the reality is we are paying near enough full market value for these bikes, and they know that.



+1


----------



## puglord (24 Jul 2010)

2Loose said:


> *Category 2:
> A cycle that has been ridden regularly but infrequently to and from work throughout the hire period. Predominantly used on the road or cycle paths for short distances.
> *


*
*
I didn't think C2W scheme would allow this condition? i thought at least half its use had to be to and from work?


----------



## summerdays (24 Jul 2010)

puglord said:


> [/b]
> I didn't think C2W scheme would allow this condition? i thought at least half its use had to be to and from work?



Define half - half the distance, half the number of occasions etc... that part isn't completely clear as far as I remember from the wording.


----------



## puglord (24 Jul 2010)

lindleyjoe said:


> Has anyone clarified whether it is self assessment or has to be done by the shop in which it was bought?




Not sure on self assessment but i do know that you can take it back to any shop thats part of the C2W cyclescheme.


----------



## Norm (24 Jul 2010)

puglord said:


> [/b]
> I didn't think C2W scheme would allow this condition? i thought at least half its use had to be to and from work?


Eh?

If it hasn't been used much, then half of that little-use could be for commuting purposes. It could be that it was never taken out other than once for commuting during the hire period, and that would be just fine.


----------



## Downward (25 Jul 2010)

It's all crap anyway , put your bike in catergory D when it's maybe A or B and if they say well it's immaculate then just say well now I am taking Ownership of it I paid the LBS to service it and give it a good clean.

My hybrid looks a mess but an hour or 2 of cleaning it'll be sparkling. The roadie however needs a bit of work to bring it back to pristine as it is used daily.


----------



## DrSquirrel (28 Jul 2010)

puglord said:


> [/b]
> I didn't think C2W scheme would allow this condition? i thought at least half its use had to be to and from work?



Then they should be paying a higher %+TAX


----------



## dubman (26 Aug 2010)

Just to let you all know the final outcome , the final price for my cat. D bike is £58.75 , im glad they never marked it A


----------



## Jezston (26 Aug 2010)

What was the original full value?


----------



## Arfcollins (26 Aug 2010)

I'm almost to the point of getting my voucher - employer hasn't paid the Cyclescheme invoice yet ans I've asked them to hold off for now as I wanted to discuss a possible 2 year lease period. FD has forwarded the e-mail below, and now I am wondering whether to go ahead with my current application or let it expire and do it after September. 

Discuss.
*



From:* cyclescheme-employernews-owner@cyclescheme.co.uk [mailto:cyclescheme-employernews-owner@cyclescheme.co.uk] *On Behalf Of *noreply@cyclescheme.co.uk
*Sent:* 17 August 2010 17:49
*To:* noreply@cyclescheme.co.uk
*Subject:* Cyclescheme Response to HMRC EIM Updates EIM 21667/21667a

*
*

*Cyclescheme Response to HMRC EIM Updates EIM 21667/21667a*

*16 August 2010*



*First and foremost, don’t panic!* 

Contrary to initial reactions to the publication of the updates, Cyclecheme would like to reassure our clients that we have a process in place that ensures our schemes continue to be compliant, whilst retaining their attractiveness to employees and employers alike. (To view a copy of the updates please visit http://www.hmrc.gov.uk/manuals/eimanual/EIM21667a.htm).




According to the updates, employers charging ‘disposal values’ lower than those described in the Valuation Table will be required to catalogue evidence of each bike’s condition and value at the time of offer of sale.
 
Cyclescheme has developed a simplified 'Condition Assessment' (CA) process in response to the guidance that was published by HMRC in December 2009.
 
The process provides the required evidence of the condition and value of the bike at the time of offer of sale.
 
It is only in the absence of any evidence, employers need refer to HMRC’s Valuation Table for acceptable ‘disposal values’ as an ‘administrative easement’.
 
Cyclescheme performs this free service for the majority of our clients whereby we handle the transfer of ownership of equipment to scheme participants at the end of the hire period.
 
This service relieves employers of considerable administrative burden at the end of the hire period.
 
As part of our service we contact all scheme participants near the end of their hire period and they report on the condition of the bike using our simple and comprehensive Bicycle Condition Guide.
 
Scheme participants can complete this process online via the Cyclescheme Extranet.
 
The condition categories have been established using our own extensive industry experience, consultation with our Independent Bicycle Dealer network, and a resultant ‘Store Survey’.
 
The condition assessment is based on 4 condition categories, *A, B, C & D.*
 
Once the condition has been ascertained Cyclescheme sends the participant an invoice for the market value.
 
In accordance with HMRC guidance contained in EIM 21667a, Cyclescheme’s condition assessment process provides 'contemporaneous evidence of the amount for which that type of cycle in that sort of condition would have realised in a private sale'.
 
In short, using our fully automated process negates the need to use HMRC's Valuation Table.
 
Appreciating that the market value invoices may exceed current participant expectations and in order to maintain the scheme's economic attractiveness, participants may be given the option to extend the hire period with Cyclescheme.
 
If the hire period is extended Cyclescheme will contact the employee and may offer ownership of the bicycle at the market value (MV). The market value cannot be stated prior to the end of this period but should be less than the valuation arrived at for bikes in categories *A, B and C* in the condition assessment.
 
Cyclescheme will be phasing in the Condition Assessment process by applying it to all vouchers ‘requested’ after Thursday 30th September 2010.
 
Vouchers ‘requested’ prior to this date will be subject to the existing Cyclescheme market value process.


To request further details of our new Condition Assessment process please email us on info@cyclescheme.co.uk with the subject line ‘*HMRC EIM Updates*’, and please include the employer name and the following information;




- _How many employees does your organisation have?_

_- Are you currently running a Cycle to Work scheme?_

*
*

Best regards,

The Cyclescheme Team


----------



## smarttim24 (27 Aug 2010)

Got my assessment back today £44.59 on a bike and equipment of £760.personally do not think that is to bad and about what I thought I would be paying.After reading all the doom And gloom that has been posted had come to expect to be paying more.


----------



## dubman (28 Aug 2010)

Jezston said:


> What was the original full value?




£1000


----------



## Bromptonaut (28 Aug 2010)

@arfcollins, 

Very interesting quote from cyclescheme. Will be equally interesting to see what happens if its tested by a 'difficult' inspector. As Chris KH helpfully explained in another thread the employer is at risk from HMRC penalties if employees gain an untaxed benefit in kind. I wonder if cyclescheme are confident enough to indemnify the employer in such circs. 

My employer, a large central gov dept, is about to launch a new scheme in October. They had to re-tender after attempts to hang on the coat tails of another departments scheme faltered. The old scheme run through Cycle Solutions had not been all that well patronised, partly because of problems around final values. 

As a member of the organisation's Bike User Group I'm invited to meet the new supplier in early September so anything that helps with asking the right questions is gratefully received.


----------



## Jezston (29 Aug 2010)

dubman said:


> £1000



So the category D payment was about a months payment? That's good to hear - if I get the same categorisation my final payment will be about £20


----------



## dubman (30 Aug 2010)

Jezston said:


> So the category D payment was about a months payment? That's good to hear - if I get the same categorisation my final payment will be about £20



yes about a extra months payment , Just hope you get a understanding shop


----------



## Arfcollins (30 Aug 2010)

Bromptonaut said:


> @arfcollins,
> 
> Very interesting quote from cyclescheme. Will be equally interesting to see what happens if its tested by a 'difficult' inspector. As Chris KH helpfully explained in another thread the employer is at risk from HMRC penalties if employees gain an untaxed benefit in kind. I wonder if cyclescheme are confident enough to indemnify the employer in such circs.
> 
> ...



I'll let you know if I hear anything more. Does anyone else have any comments or suggestions re my earlier post about the change that happens in September, beneficient or not?


----------

