C2W Scheme - minimum number of payments?

[colinr]

I can't find this in any of the official documentation, so hoping that someone who knows the system can help.

Is there a minimum number of payments or anything similar on C2W? I'm considering asking my boss if I can get my new bike through the scheme and pay off the whole thing in one month.

Also, if this was possible, would it affect the final market value payment? (I'm not even sure what the final market value payment means, I just read that it exists)

Thanks.

 

[summerdays]

Don't know but a one month duration sounds more like a one month loan - a bit cheeky. Why not make see if they can do 3 months instead.

 

[colinr]

Don't know but a one month duration sounds more like a one month loan - a bit cheeky.

It's entirely cheeky

But the important factor that I can't work out is who takes the hit for the one-month loan though. If it's between mine and the government's wallet, I'm fine with that. If it's my employer taking a hit then your 3 month idea would be better.

 

[Jonathan M]

Once the payments are made, though, don't you either hand the bike back, or pay off the reamianing balance? It has taken my employer a long time to get their heads around the scheme, and they've really tried to plan it out to avoid abuse/misuse by employees, largely to avoid a sudden rush of people wishing to join in November, the bosses main concern being people abusing the scheme to purchase bikes for their offspring. They've limited the period that you can sign up in to a 4 week period in late spring. I think this is a reasonable decision, if C2W is to encourage people who would not usually consider C2W then they at least have some weeks (or maybe months) of less that shoot weather to get into the habit.


My understanding of the scheme, and I'm hoping to use my employers scheme in the spring, is that you can purchase a bike of up to £1000 (or bike & accessories up to the same value). You get vouchers to use at the appropriate bike shop, and then make part payments over what I understood to be a fixed 12 month period. At the end of 12 months your (now second hand) bike has a fixed market value, and if you wish to keep it you pay the final market value, or hand it back. So theoretically if you make all your payments in 1 month, wouldn't your fixed market value be significantly higher than it would be 12 months down the line? This would mean less of a saving than the 12 month payment scheme.

On a salary sacrifice scheme the payments are taken pretax, so you pay proportionatly less tax & NI (pension as well if in an employer scheme). I'm unsure if taking one month to make your payemnts would be in your interests, as spreading them out for longer would mean less tax & NI contributions for you & your employer.

Can we be cheeky and ask why you're keen to make all your payments in one month, and importantly will your monthly salary be enough to cover 12 months worth of payments?

 

[colinr]

Thanks Jonathan. All the information I can find seems to be aimed at larger companies wanting to set up as a general scheme. I work in a company with ten people, nobody else is interested in cycling at all, so this is more or less a one off thing. My boss wouldn't shaft me on this - I'm buying a new bike either way but if I can save money I'm going to.

The "paying the final balance" part isn't very clear. It reads more like an token payment for keeping / disposing of the bike than an actual settlement. Especially as they suggest 5% - I doubt a £1000 bike is only worth £50 after one year!

I've found that 12 months isn't set in stone. The only condition I'm aware of is that, after sacrifice, you must still be earning at least minimum wage. Based on gross figures I can cover this in a single payment.

I would prefer to do as few payments as possible because a) company cashflow is tight so if they have to 'loan' me the money over 12 months, it won't happen and I already have the money so would just take a big hit one month and 'pay' myself with the saved cash and c) I don't like owing money if I don't have to.

 

[MacB]

Colin, in a small setup like you describe then no reason you can't do this another way. Follow the standard process but you give the loan value to your boss up front in cash. Each month, when your pay is reduced by the repayment value, your boss gives you that amount of cash back. Scheme rules all adhered to, and you get savings benefit, but your boss isn't out of pocket for any period of time.

Obviously this would be a private, and trust based, method.

 

[colinr]

Thinking outside the box! Cheers MacB. The monthly cashbacks might be awkward but if it's the only way then it's better than not at all.

 

[SavageHoutkop]

I think the main thing that might catch you is the 'fair value' argument. The 'fair value' of a one-month old bike is a lot higher than the fair value of a one year old bike.

I have also heard via the grapevine that the taxman is starting to consider looking a bit closer at the 'fair value' thing - 5% is clearly too low, but of course if they up that it doesn't make sense to do the scheme really, as you have already paid for the bike - effectively the employer will be making money off you (!)

I also work for a small company who did the arrangements in-house; I'm paying mine off after 6 months.

 

[MacB]

Thinking outside the box! Cheers MacB. The monthly cashbacks might be awkward but if it's the only way then it's better than not at all.

another consideration is what you're actually saving by doing the C2W. If, via the scheme, you're limited to certain shops, full list price etc then it may not be anything like the headline savings. Having the cash ready can enable you to take advantage of a far broader range of discount/deal options. IMHO the biggest benefit of C2W lies in the interest free repayment terms, if these aren't needed then I wouldn't use it.

 

[colinr]

Fortunately for me, nearly every LBS in Norwich does C2W. I'm current looking at using CyclesUK - because they're a chain I'm not sure how good they can go on cash deals. I'll definitely test that option before getting into anything.

 

[g00se]

Hi,

I bought my C2W bike from CyclesUK in Norwich. They're OK but I prefer Pedal Revolution and Specialised as LSBs. Try to talk to the manager - short bloke with glasses - he seems to know his stuff.

When I filled in the initial form, I paid a refundable cash deposit of £50 to secure the bike and have them order it in so it would be there when the voucher arrived. Maybe you could arrange a bigger deposit?

What bike are you after - have you decided on the model?

As for length of repayments, have a word with cyclescheme.co.uk directly. I had problems with my scheme (down to my company's relocated finance department) and was in contact with Karen Godfrey at cyclescheme - she was more than happy to push things from their end.

They were recently interviews in the Guardian regarding setting schemes up for very small companies - with the schemes being driven by employees rather than the companies themselves:

http://www.guardian.co.uk/money/2009/sep/19/cycle-to-work-scheme

So i reckon you should give them a ring on 01225 448933 and see what they say.

 

[colinr]

I'm looking at Wilier, hence CyclesUK. I've been in there for stuff before and the staff have been really helpful so I've no objection to using them. Street Life come well recommended but I don't really want Specialized.

I was under the impression that cyclescheme.co.uk are a sort of 'middle-man' that aren't actually required because being a government sanctioned thing, all arrangements can go directly between employer and LBS. Or are they the official face of the scheme for these sorts of questions?

I'll see what they have to say anyway, thanks.

 

[g00se]

You're right, cyclescheme are middlemen - and they take a cut of the shop profit. Because of this, most of the member shops will only sell bikes through cyclescheme at the RRP and not at any discounted price - though cyclescheme say this isn't a prerequisite of the scheme. So if you can find a heavily discounted 09 bike then a cash deal might be worth it (though scheme savings for accessories can make it worth it if you need the bits and pieces like I did).

You don't need the middlemen - though they'll be more admin for your employers to do. I've seen downloadable forms to get things going if you want to do it direct - but I can't remember where, sorry.

Oh - not Specialized the bike manufacturer - i meant Specialised the Norwich bike shop on Connaught Road (not far from Streetwise). Best bike shop in Norfolk by far. They mainly do spares and repairs but sell folders, some road bikes and hand-built stuff. It's worth a visit.

Search for 'specialised' on these pages:

http://www.ctc.org.uk/DesktopDefault.aspx?TabID=3811

http://www.norwichonline.co.uk/reviews/542/

http://www.cyclechat.co.uk/forums/showthread.php?t=11917&highlight=specialised+norwich

http://www.cyclechat.co.uk/forums/showthread.php?t=4498&highlight=specialised+norwich&page=2

(No affiliation - just a happy customer)

 

[grhm]

One point that no-one else seems to have mentioned... AIUI you hire the bike for a fixed period (normally 12 months but I beleive it variable - I've seen 18 quoted elsewhere) and you pay back the value during that period and buy the bike at "market value" at the end of the hire period..

I'd check the wording on the government rules but I can't see why for could have a fixed 12-month hire period and buy the bike at the end for the nominial 5% value - whilst paying back the value in one month (as the rules might state you have to pay back during the hire period - not that that payment have to be spread evenly over the whole hire period.

Big Caveat - I've not actually seen/read the official government rules, you'd have to check the validity of this approach - but it could work. Failing that I like MacB's idea of (completely separately) giving your company an interest-free loan for the same/similar ammount.

 

[colinr]

not Specialized the bike manufacturer - i meant Specialised the Norwich bike shop on Connaught Road

Sorry, I was blinded by branding! Do you know what makes they stock?

CyclesUK say they handle the paperwork. They seemed pretty keen to offer C2W, must be a good sales tool though (SAVE UP TO 50% screams the leaflet).

I suspect the 12 month thing is a matter of all round convenience rather than rules but
I've mailed Cyclescheme to see what they know.

Will report back when I know more.