Cycle to Work Scheme - Rip Off.

[philipbh]

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.

How will he arrive at a valuation ?

Apologies - this can be calculated from the table in the link earlier on

 

[Jezston]

I didn't realise you could just buy a set of lights on cycle to work - I thought you had to buy a whole bike?

 

[pshore]

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?

I agree with you 100% Jezston.

The scheme on paper is written up as a hire but is more like hire purchase, but they can't on paper say it is HP because the tax free element could not be used (as I understand it).

However, it is not a hire scheme. If there is a mechanical fault you cannot give the bike back and get another one like you can if hiring a car. Same for maintenance.

Also, being committed to hiring for 12 months at a cost which covers the full cost of the bike. If you thought there was a reasonable chance of you NOT being offered the bike at the end, you wouldn't sign up would you ?

There is an expectation that this scheme is a purchase, not a hire, regardless of what is written down. That is why it is mis-selling and is why I don't believe that contract will stick if tested in a court.

 

[Paul Walters]

I agree with you 100% Jezston.

The scheme on paper is written up as a hire but is more like hire purchase, but they can't on paper say it is HP because the tax free element could not be used (as I understand it).

However, it is not a hire scheme. If there is a mechanical fault you cannot give the bike back and get another one like you can if hiring a car. Same for maintenance.

Also, being committed to hiring for 12 months at a cost which covers the full cost of the bike. If you thought there was a reasonable chance of you NOT being offered the bike at the end, you wouldn't sign up would you ?

There is an expectation that this scheme is a purchase, not a hire, regardless of what is written down. That is why it is mis-selling and is why I don't believe that contract will stick if tested in a court.

I have now re-read the fine print, and find all of the above to be the case. I am now certain I have been mislead. There was always the expectation that the bike (or in my case lights) would eventually be mine....... and that certainly was the only reason I sigen up to it...... the hire terms are so onerous that otherwise, I wouldn't have bothered.....

 

[marinyork]

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.

A very sensible post.

 

[suecsi]

A very sensible post.

+1

I think if I paid the 25% in January/February next year, I would still be looking at a saving of £250.00 on my Brompton M3L, which isn't to be sniffed at.

 

[Bromptonaut]

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.

+1. I'm in same position with an M6R. Paid for over 12 months from May 2009 and now on extended free hire.

Original deal with employer was that they needed a shop valuation to support market value - local HMIT is a stickler. Now moving over to the Cyclescheme system where, at end of year one, the bike reverts to the scheme company and the hirer pays a 'deposit' equal to the table value at year 4. Deposit refunded if bike is returned before yr 4 otherwise ownership passes to hirer at that point. In practice it's now mine to do with as I wish.

I suspect some of the problems are down to fact that C2W is owned by Dept for Transport but impinges on tax which is the bailiwick of HMRC. Inter departmental sensitivites seriously engaged!!

 

[evilclive]

Original deal with employer was that they needed a shop valuation to support market value - local HMIT is a stickler. Now moving over to the Cyclescheme system where, at end of year one, the bike reverts to the scheme company and the hirer pays a 'deposit' equal to the table value at year 4. Deposit refunded if bike is returned before yr 4 otherwise ownership passes to hirer at that point. In practice it's now mine to do with as I wish.

Actually with C2W the deposit may be refunded if the bike is returned before year 4, but instead you have to pay a disposal fee which happens to be the same amount.

They're really quite keen not to get into the second hand bike business :-)

 

[Norm]

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

I don't agree with that.

The original guidance was only 22 pages in total and was the most straight forward tax-related government document I have seen. For instance:
"There should be no automatic entitlement for the employee to take ownership of the cycle and cyclists’ safety equipment at the end of the loan period"

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.

I think it's very strange to criticise, as you do, the "rules as presented by those administering cycle schemes". Unless you have reviewed a variety of alternatives to produce the assertion that they are "apparently very wrong", you are going on hearsay and a few negative examples. All cyclists jump red lights and knock down old ladies on pavements.

However, there is only one set of guidance from the government.

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?

Again, I refer you to the guidance (Can you see now why I recommend that people read it? The answers are in there)

12. Insurance
Employers and employees need to consider insurance. Even though employers own the cycles and safety equipment, it may be more practical for the employee to have the cycle covered under their own house and contents insurance as long as they advise their insurer that their employer has an interest in the cycle. Alternatively, the employer may consider adding them to their insurance agreement with their own insurers. This needs to be determined and set out in the agreement between the employer and the employee.

So, the employee doesn't have to insure it but insurance is something which needs to be considered so no-one should be in any doubt "what happens if it gets stolen".

If you have an issue with your employer's implementation of the scheme, then that's between you and your employers.

However, the title of the thread is "Cycle to Work Scheme - Rip Off" and that is, IMO, very wrong.

 

[Soltydog]

The scheme is not a rip off, but I understand where the OP is coming from. My employer has run the scheme a few times through cycle solutions. The first scheme there was no final payment so i guess the company still own my Allez
The last scheme they run that has finished ended with 1 month +VAT payment to purchase the bike & we'll see what happens with the current schemes & the new guidance from HMRC, although they have just opened the scheme again & the leaflet from cycle solutions has across the top of it save upto 46% on a new bike, so it is somewhat misleading & inside on the various bikes listed it has figures for "your total cost" Surely any final payment should be part of your total cost ??

 

[Jezston]

I think it's very strange to criticise, as you do, the "rules as presented by those administering cycle schemes". Unless you have reviewed a variety of alternatives to produce the assertion that they are "apparently very wrong", you are going on hearsay and a few negative examples. All cyclists jump red lights and knock down old ladies on pavements.

Wow. What?

I'm basing it on the rules as presented to myself, my colleagues and friends who have signed up to the scheme 'pre-clarification', and so many people on here who have said they were told under the scheme that they would pay £x a month then at the end they'd pay no more than a month's worth and the bike is theirs - and then found out at the end of the scheme - post-clarification - that was actually wrong.

That's what we were told would happen, that was what we expected to happen, that isn't what happened. It's not really fair to criticise those who fell victim to being misinformed by the people who run the schemes, because we never read the official DFT Guidance that I'm sure few of us knew anything about.

 

[Norm]

Even worse than I suggested.

You are throwing out a blanket dismissal of all those who have administered cycle to work schemes on the basis of one specific scheme.

 

[2Loose]

I am with Jezston and many others on this one.


Although I appreciate the scheme for what it is in reality (I've been through it almost twice now) , the way it is 'sold' to staff by employers is generally by glossing over any potential issue and using much simplified bullet points;

You WILL most likely pay only 5% of the original price as a final payment after 12 months.
You WILL most likely save 40% of the total price over the 12 months.

etc. etc.

It reminds me of the poor pension and insurance advice given out pre-regulation in its simplicity and misdirection.

In an employer-employee relationship there is normally a great deal more trust than when dealing with a financial adviser, so small print is rarely looked into. Also, paperwork shown merely references the hmrc guidance, rather than showing the full 22 pages(?) for the employee to scrutinise.

Fortunately for me, I adhere to the 'if it looks too good to be true, it probably is' school of thought and read up and around the subject before anything is signed, so I was aware of the real way it worked from the beginning, rather than the way it was presented to me.

Point of interest - it always seems to be HR staff\departments who handle this kind of thing, rather than financial staff who would be better placed to explain any potential shortcomings.

Anyhoo - although I love the scheme and have benefited from it immensely,. all of the negative comments I have ever seen regarding the scheme are to do with the way it was explained and their expectations not meeting the reality.

This site and others go some way to help explain the scheme in actuality...unfortunately it is often the case that the scheme has already been entered into before the knowledge is found.

This is not the schemes fault, nor hmrc's. However I really think that the selling could be better explained and regulated at the employer end.

Two other things: Shouldn't all c2w stuff be in commuting? Also, as this type of stuff comes up quite often, perhaps a Sticky would be informative...although that would be a whole lot of Stickies...

 

[Alembicbassman]

We need a poll to find out how many C2W users actually do the 50% work related journeys (as per the agreement) on their C2W bikes.

I'm guessing it'll be around 50%

The C2W scheme offered the user the chance of getting a bike less 20% income tax on installments, so if you end up with your C2W bike at anything better than 20% discount you're still on the winning side.

You'd be hard pressed to get the same deal in a shop. 20% discount plus interest free credit.

I just pay cash for my bikes, I get up to 50% discount off RRP if I shop around

 

[mangaman]

I chose to avoid our CTW scheme as the tax issue was coming to a head.

I find it hard to sympathise with the OP (sorry) - but you've already been through the process twice - and are still paying below the odds for bikes and accessories.

I find it a bit much to blame your employer. You still have a bargain now it seems to me.