Cycle to Work Scheme - Rip Off.

[Paul Walters]

My point is not that I have not had a good deal. I consider an 18 month interest free credit agreement a good investment. And I am cerainly not whinging about the cost.

What I am (justifiably) annoyed at, is that my employer made the statement in a presentation to staff when they were pushing this scheme that the final payment will not be more than the monthly payments. My contract was with them, irrespective of what the HMRC then does, I consider that the original agreement takes precedent, and that they are therefore in breach of contract.

Of course, I will re-read the 8 pages of light grey 6-point font contract, and I fully expect to find some term telling me they can do what the Fcuk they like without telling me.

The increased cost is not the issue here. It is a principle of contract.

 

[Paul Walters]

It is such a shame that people don't read the regs before signing up.

You'd think that people would prefer to know the rulesi in advance than to whinge after the event.

And the rules were not changed in any way, shape or form last year. Nothing has been retrospectively applied and trying to say that the final price was agreed in advance will get the whole scheme disallowed. I guess that wouldn't go down well with your colleagues.

The C2W regs are only a dozen pages and are on the DfT's website, as they have been all along. Have a read before you make yourself look silly.

This scheme was pushed hard by my employer and Cycle Solutions and a number of very searching questions were asked during the roll out. My job involves dealing with contracts on a daily basis, and in the main, I do read the "small print". In this case, however, since it was a scheme heartily endorsed by my employer, I felt there would be some form of vetting by the HR/payroll department prior to entering into the contract with the supplier. It is now apparent however, that like most other things arranged here, they can't get a thing right. I have learned my lesson here, and now distrust my employer more than ever before. And I am not whinging. I feel aggrieved that I have been lied to.

 

[exbfb]

My own situation is far simpler.

At the end of the hire period, they give me the bike as a benefit in kind.
I pay tax and NI on this benefit in kind.
So, a couple of quid a month in year two.

For that plus under £20 a month in year one, I have a bike I wouldn't have gone out and bought.

I'm happy.

All the folks who didn't get into the deal have now had a think about it and are wishing they had.

 

[GrumpyGregry]

This scheme was pushed hard by my employer and Cycle Solutions and a number of very searching questions were asked during the roll out.

Apart from the ones that sounded like "Isn't this too good to be true?" and "What happens if HMRC wise up?" It was. They have.

Never base anything long term on a tax break; they never last.

 

[Norm]

In addition to Greg's comment...

The increased cost is not the issue here. It is a principle of contract.

As I said, had you read the tax regs, you'd have seen that they aren't even allowed to agree to sell the bicycle to the hirer in advance (resulting agreement is likely to be a hire purchase agreement in which case the tax exemption available for a loaned cycle may not be available) and you'd have seen that the final payment must be at market value (to prevent a taxable benefit in kind arising as a result of the transfer of ownership the employee must pay the employer the full market value of the equipment).

 

[Norm]

It is the second time I have used the scheme, and was very pleased with the savings I made in the original tranche in 2008.

I take it that you have declared the difference between your purchase price and the actual market value on your previous bike.

To do otherwise could be tax evasion.

 

[Paul Walters]

I take it that you have declared the difference between your purchase price and the actual market value on your previous bike.

To do otherwise could be tax evasion.

My tax code has been amended to take this into account - by £7.40.

My grievance is that the whole thing was pushed hard, and the nitty-gritty glossed over by my employer. I suspect this was due to pressure from the supplier to sell bikes to a captive market, and the blind naivety that seems to pervade our HR dept.

Yes, I could have read the Tax Regs before entering the agreement, but the presentation was made on the basis of "it's all been sorted by us".... like I said, I won't be fooled again.

 

[pshore]

I too don't fully agree with the way the changes were being rolled out to existing cycle purchasers. I didn't want to sign up for another 4 years of contract, and I disagreed with the way the 25% hmrc change was being used to extort additional money out of cycle purchasers.

I proposed another solution to cycle scheme which was for me to save tax on 75% and pay tax on 25% but they didn't go for it. We are now at an impasse, but I have the bike and they will have to take me to court if they want a resolution. They have stopped chasing me.

 

[Paul Walters]

In addition to Greg's comment...

As I said, had you read the tax regs, you'd have seen that they aren't even allowed to agree to sell the bicycle to the hirer in advance (resulting agreement is likely to be a hire purchase agreement in which case the tax exemption available for a loaned cycle may not be available) and you'd have seen that the final payment must be at market value (to prevent a taxable benefit in kind arising as a result of the transfer of ownership the employee must pay the employer the full market value of the equipment).

Perhaps I should advise them of this ?

The following statement is still on our staff intranet bulletin

"at the end of the loan period you may have the option to purchase the equipment......... This would not exceed the equivalent of one months' salary sacrifice before tax".

OK, I understand that the word "may" is in there, but as I said, all this was glossed over in the roll out, and I feel like I've been mis-sold the scheme.

 

[youngoldbloke]

To go off at a tangent for a moment ..... has any survey ever been conducted to ascertain how many 'cycle to work' bikes are actually used for that purpose?

 

[philipbh]

I feel like I've been mis-sold the scheme.

Yet you (and your colleague) have made savings and had the benefit of the bike - so its not all bad

Option 1 - just hand back the bike at the end of the scheme - make it their problem (LHE*)

Option 2 - re frame the problem by imagining the original agreement was over 21 months and not 18 - the "final payment" equivalent to three months salary sacrifice

Option 3 - your colleague could agree to the 90 and ask to pay it over three months perhaps

* I wonder how long before there is a secondary market for "ex cyclescheme bikes"?

 

[Paul Walters]

Yet you (and your colleague) have made savings and had the benefit of the bike - so its not all bad

Option 1 - just hand back the bike at the end of the scheme - make it their problem (LHE*)

Option 2 - re frame the problem by imagining the original agreement was over 21 months and not 18 - the "final payment" equivalent to three months salary sacrifice

Option 3 - your colleague could agree to the 90 and ask to pay it over three months perhaps

* I wonder how long before there is a secondary market for "ex cyclescheme bikes"?

He's decided that he'll keep the bike, but is advising LHE of the "wear and tear" it has suffered so that the final price will drop. I haven't bought a bike, but lights, so there's not much wear and tear will apply I suppose.

 

[Red Light]

"They have no option"

Yes, they do.....they can choose to pay the difference and that's the stance I'd take with them.

You'd still be liable for the benefit in kind tax on that difference payment.

Unfortunately HMRC tightened up on the rules on the final value payment so while what the OP was told was common at the time, its no longer allowed.

There are ways out. An easy one is to extend the loan of the bike for several more years at no cost and then pay the much reduced final value then. The approved final value with age is listed by HMRC. There are other options that people like Cyclescheme have worked out too.

 

[John the Monkey]

I got a Brompton S6-L on our scheme, and the application of the regulations changed during the "hire" period for me too.

The saving wasn't so great as it would have been, but it was still a saving, and there was no way I'd have got this bike without the scheme.

The Brompton is fantastically versatile, and I ride it on days I need to work later than usual (so's I can hop on any train, even the bike unfriendly ones) and in the depths of winter, when I don't fancy the "long" commute. Outside of commuting duties, I run short errands on it every now and then.

I feel C2W is a bit of a kludge, and the government should look at specific legislation to enable bike commuting (along similar lines, but without the "you're hiring the bike for a year, wink wink" bodge). But I'm not unhappy with my experience of it at all.

 

[Jezston]

It is such a shame that people don't read the regs before signing up.

You'd think that people would prefer to know the rulesi in advance than to whinge after the event.

The 'rules' as presented by HRMC are complicated, often unclear, and full of holes and unanswered questions.

The rules as presented by those administering cycle schemes, particularly before the 'clarification' last year were very clear and also apparently very wrong. I think it's rather harsh to criticise those who took out the schemes because they based their decision on the information as presented to them by the organisations running the schemes.

The big thing that still sticks in my mind as a major issue of the scheme is insurance. Why is it, if the bike does not belong to the employee, does the employee have to insure it as their own possession? What happens if it gets stolen?