Cycle Scheme - Don't Bother

[Norm]

Lady who does the books said that she contactedthe rev, and the bikes cannot be gifted at the end of the term as it is a disposal of assets in the taxmans view

That's not quite true, as the bike can be gifted but it will be as a benefit in kind and will attract tax at your marginal rate on the value from HMRC's matrix of age & original cost.

In other words, if you were gifted a 12 month old bike which cost £1k would have an assumed value of £250 (which is 25%) and that would be added to your tax code which will cost you £100 if you pay at 40% or £50 if you are a 20% tax payer.

There are a couple of schemes (waits for lejogger) which specifically use the gift / BiK treatment.

 

[Linford]

That's not quite true, as the bike can be gifted but it will be as a benefit in kind and will attract tax at your marginal rate on the value from HMRC's matrix of age & original cost.

In other words, if you were gifted a 12 month old bike which cost £1k would have an assumed value of £250 (which is 25%) and that would be added to your tax code which will cost you £100 if you pay at 40% or £50 if you are a 20% tax payer.

There are a couple of schemes (waits for lejogger) which specifically use the gift / BiK treatment.

You also have to pay for the rental/HP of it as well as I understand which is ?

The incentives for the company to take it on don't appear to be that great.

 

[Norm]

The incentives for the company can be significant. Not only do they save E'ers NI (which is, IIRC, 13.8%?), but also, if you've paid £500 over 6 months to ride a £1k bike, that might be an incentive to stop you looking for a new job until the end of the contract.

 

[Linford]

Personnel turnover in my works is very low TBH. I think that is the case for most places now - especially in a manufacturing environment. they haven't exactly pushed to boat out to encourage manufacturing in the UK over the last 30 years.

 

[MacB]

Norm I've lost interest. I was hoping for a mature discussion about the merits and pitfalls about the various cycle schemes available, you seem more interested in trying to score points. Bye

You do realise that you're arguing about a finance based scheme with an accountant who has been involved in setting one up from scratch?

Let's be totally clear here, things like Cyclescheme, cycle to Work, are middlemen functions taking a cut in return for administrative duties. There is no requirement to use one of these middlemen, any company can create their own schem on their own behalf. Even the concept of vouchers and being tied to specific retailers is middleman invention.

Your company can do this and give you a wadge of cash to go shopping with, if they so wish.

My understanding, and Norm could correct me on this, is that the use of middlemen makes little difference to the benefits to the company, but makes quite a difference to the deal the employee gets.

 

[dellzeqq]

My understanding, and Norm could correct me on this, is that the use of middlemen makes little difference to the benefits to the company, but makes quite a difference to the deal the employee gets.

and to the LBS, who have to cough up the 10% and fill out the forms. Which my brother refuses to do.

 

[Norm]

My understanding, and Norm could correct me on this, is that the use of middlemen makes little difference to the benefits to the company, but makes quite a difference to the deal the employee gets.

Financially, there is no direct charge to the employer, although Cyclescheme did, at one stage, seem to be pushing employers to selling the bikes to Cyclescheme. This was ostensibly to reduce the company's administration (which was little-to-nothing anyway) but in reality, it also allowed Cyclescheme the opportunity to be the ones to sell the bikes back to the employee at the end of the rental period.

As for the deal that the employee gets, Cyclescheme are more restrictive than necessary and...

and to the LBS, who have to cough up the 10% and fill out the forms. Which my brother refuses to do.

... they take their 10% from the LBS, potentially removing much of the margin that the LBS receives.

When I set up a scheme, because we went independent, I was able to negotiate my own deal with the LBS (including a 10% discount & various bits thrown in or fitted FOC) because the only thing that the LBS had to do was accept a company cheque. No forms, no lost margin, no extra time in administration, no agreement to promote a third party middleman, they just had to take the payment.

Which reminds me...

Personnel turnover in my works is very low TBH. I think that is the case for most places now - especially in a manufacturing environment. they haven't exactly pushed to boat out to encourage manufacturing in the UK over the last 30 years.

... depending on the details of the scheme, the employer may charge to transfer ownership at the end of the rental period, Linfy. That obviously reduces the benefit to the employee but it does appear to be the way that the scheme was intended to be set up. Thus, the employer could make 38% of the purchase price of the bike as "profit" to cover the (negligible) administration of the scheme.

 

[wiggydiggy]

<SNIP>

Mac that wasn't the issue, I didn't like the condescending manner that his post were taking his or his clever attitude towards 'scoring points' over myself. Too often I see a interesting debate or discussion on Cyclechat derailed in such a way, the fact he is a staff member and perhaps should have been more considerate in his posts only confounds the matter. We should never look down on people that know less than ourselves and although I would have welcomed discussing the matter in a less confrontational way that's not how the conversation was going for me.

Whether you or anyone else agrees with that is immaterial, that is how his posting made me feel so I have bowed out of this.

 

[Norm]

Given that your first response to me was mockery...

I don't think that buying a bike yourself works well for many people at all. Other than those that sell such bikes and benefit from such profits, of course

But thats just my opinion.

...I'm not sure what you expected.

However, what you see as condescension, wiggy, is nothing more than frustration.

Had you only answered honestly when I asked whether your company used CycleScheme, or had you taken my suggestion about reading up on CycleScheme, then you might have gained the understanding that you profess to seek.

Instead, your attitude got all aggressive/defensive ("I won't go 'and find about Cyclescheme' as I already know enough about it") and your posts became repeat attempts to belittle me.

As for "staff member", CycleChat is a huge community and many people use the resource here to find out about some of the more complex issues around cycle to work schemes and people posting stuff which isn't true (such as Halfords use CycleScheme) needs to be addressed.

Rather than continued sniping, you could spend some time reading the CC boards about the various options in relation to the cycle to work regulations, and how many people get confused because they see stuff that is simply not true and how much time I (and a few others, like lejogger, 2Loose, RedLight, Cubist) have spent trying to bust the myths. Or you could drop the mockery and ask any question about the general regulations or about your specific scheme.

I've been trying to correct such falsehoods since long before I became a "staff member" here and I have the unfortunate feeling that someone will need to be doing it long after my skewers have rusted and my bearings have seized.

 

[wiggydiggy]

<SNIP>

Norm I've re-read our conversation and I'm sorry but I can't agree that I spoke to you aggressively, or got defensive and I certainly did nothing to belittle you (or participate in 'sniping'). If anything I've attempted to meet you halfway by commenting that you make some good points and asking for more information about your own poor experiences with Cyclescheme.

When I did take onboard your advice that Cyclescheme is not the Halfords Cycle2Work scheme I have used you tell me it is not relevant which I don't think is the best approach at all - both are scheme's run to help people get on their bikes so surely discussing one brings the other to the fore?

If you thought I was belittling you perhaps asking me to stop and look at the differences in how the two schemes are run (Cyclescheme vs HalfordsCycle2Work) would have been a better approach, I don't mind correcting myself if someone gets the wrong impression from what I post as it is often hard to get accross what you truly mean with words only. I'd have been happy to do that BTW (confirm I wasn't trying to belittle you and discuss Cyclescheme VS Halfords Cycle2Work)but you put me right off.

So.....

Extending the olive branch I'd like to put across my own experiences of Halfords Cycle2Work scheme, and perhaps compare it to the 'Cyclescheme' company for anyone reading:

I've had 2 bikes from the scheme, which has a maximum of £1000 for my company, and I have spent £300 and £500. Although there is a relatively long lead in time from deciding value to collecting the bike, this is understandable as we do have a lot of employees. The payments are taken automatically from salary for 12 months, at the end of which a final payment if we want to keep the bike is agreed. It has proved quite popular as the waiting list for bike spaces at my office is now over 100 people although I accept they may not be all using the scheme!

I would like to correct myself here as having checked my notes at work, it is the 'P11d Tax Code Method' which we use. The basic sums are [Voucher Value] - 18%[of Voucher] * tax bracket (20% for lower rate) = £Sum to pay. My notes from my latest application indicate its going to be 20% of £90, or around £18. This sounds about right as I believe the Halfords Cycle2Work just charges a flat fee of £20 for under £501. Certainly my £300 bike also needed a payment of £20.

The bikes themselves the 1st one was from Halfords, the 2nd from an LBS, the advantage of going for a Halfords brand is they offer 15% free accessories which can be handy for beginners to get kit you need and if they are reduced at the right time a bargain can be had. Obviously an LBS can offer wider range of bikes but they will tend to charge full RRP, I was lucky that I got a 'last one in the shop' and it was reduced anyway.

So Halfords Cycle2Work is not Cyclescheme as the OP and others here are familiar with, but it is a successful (for all parties) cycle to work scheme run that someone looking to get their company involved in with could investigate more. That's all I was really trying to get accross.

Better? (long olive branch)

 

[Norm]

Better? (long olive branch)

And apologies if I did come across as condescending, it really was just frustration. Coffees are on me next time I'm in **insert wiggy's home town** And no, I don't mean that to be an invitation to pour coffees on me.

I should have realised that you were thinking of P11D. I was going through all the tax codes which I could remember, from P45 (no-one wants that one!) and P46 to P35, P60 and P14 (which are needed soon). I got kinda confused by the P14 especially, as it was close to your P41 but that's a year end return and I couldn't link that to salary sacrifice. The P11D method, where you pay tax on the HMRC value rather than paying the value itself, is by far the best option (IMO) so you are onto a good one there.

The £1k limit is not specific to your company, it's a general rule and is part of financial services regulations rather than the cycle to work scheme rules. In outline, for a company to lend over £1000, they need a consumer credit licence and they are regulated like a bank or a loan company. I understand (I think it was RedLight who posted it here) that it costs around £1200 to get a CCL, so most don't bother and stick to the £1k limit.

As for the difference between Cyclescam and Halfords' Cycle2Work scheme, they do seem to have taken different approaches. The latter seems to be much more about getting the bikes sold which is, I guess, because that's where they are making their money. Cyclescheme don't charge anyone explicitly (other than the supplying dealer) so they need to be more subtle & covert with the way that they get money from employees and employers. I'm always in favour of openness so the Cyclescheme business model is never going to get my vote.

 

[wiggydiggy]

<SNIP>

No probs buddy

Its interesting you mention Consumer Credit License - we definitely have one (its a bank) so I wonder if I can persuade them that £1k or more bikes are appealing to some people. I doubt it though as all of our leaflets say 'upto £1k'

Did you spot this BTW on Halfords website "We deliver unbeatable savings for you and your employees - in fact, we promise to beat any other Cycle to Work scheme provider^^." I'm guessing they are talking about Cyclescheme there!

^^Halfords promise to offer your scheme participants the opportunity to make better overall savings off bikes and safety equipment sourced on Cycle to Work than are available from your current scheme provider.

 

[Norm]

Its interesting you mention Consumer Credit License - we definitely have one (its a bank) so I wonder if I can persuade them that £1k or more bikes are appealing to some people. I doubt it though as all of our leaflets say 'upto £1k'

That should work - if a bank can't sort out a CCL, then who knows what sort of a mess we'd be in. Although it's possible that the limit is set by Halfords' scheme. They might not have the flexibility to say employees of company A, which is a manufacturing company, can only spend £1k whereas staff from compoany B, a bank, can have an unlimited budget.

This is also one of the problems with the schemes, though. The original DfT document is quite short and easily understood, as are the HMRC guidance notes. The interpretations, though, are myriad and confused and it appears to my untrained eye that many are not compliant with the regs.

I hadn't spotted that on the Halfords site. It is interesting, though, as they do seem to be pushing themselves over "any other Cycle to Work scheme provider". And, IMO, that's a good thing.

 

[Grizzly]

I love a happy ending

 

[wiggydiggy]

<SNIP>

I think its combination of the scheme and the limit to which the company wants to pay - that P11d method involves my company paying HMRC themselves the 'fair value', I think. I'll defer to your expertise on that

Whats annoying is that 'Cyclescheme' appear to be giving out such a negative experience that its perhaps rubbing off on people tempted to try one of the alternative providers.

This is a good example of another good supplier - Leisure Lakes Bikes - a bike shop that will not only take the Halfords C2W voucher as I nearly got my bike from here (but I found a supplier closer), they will will also help you set up your own scheme! http://www.leisure-lakes-c2w.com/ .

I love a happy ending

Its all fun and game really