Cycle to work scheme

[buzzy bee]

Hi

I was wondering if someone can explain how this all works, I am quite tempted by it.

How do I pay for the cycle, is it mine, after a set period?

Do I make a saving, how much of a saving.

I went onto the site and did some calculation on a bike costing 400, it came back as costing 240 pounds, but how does this happen?

What road racing bike would you go for if you were using this scheme?

How does the sceme know you are cycling to work, do you have to use your bike everyday?

Sorry for all the questions, but I really don't understand it just now!

Cheers

Dave

 

[Downward]

Hi

I was wondering if someone can explain how this all works, I am quite tempted by it.

How do I pay for the cycle, is it mine, after a set period?

Do I make a saving, how much of a saving.

I went onto the site and did some calculation on a bike costing 400, it came back as costing 240 pounds, but how does this happen?

What road racing bike would you go for if you were using this scheme?

How does the sceme know you are cycling to work, do you have to use your bike everyday?

Sorry for all the questions, but I really don't understand it just now!

Cheers

Dave

Including final fee + all payments assume the savings as loweretax earner to be 25%

 

[aJohnson]

Is there a certain scheme for Students?

 

[marinyork]

No. Many bikes shops do "student deals" though. Not necessarily new bikes but some good deals.

 

[Cubist]

Hi

I was wondering if someone can explain how this all works, I am quite tempted by it.

How do I pay for the cycle, is it mine, after a set period?

Do I make a saving, how much of a saving.

I went onto the site and did some calculation on a bike costing 400, it came back as costing 240 pounds, but how does this happen?

What road racing bike would you go for if you were using this scheme?

How does the sceme know you are cycling to work, do you have to use your bike everyday?

Sorry for all the questions, but I really don't understand it just now!

Cheers

Dave

Dave
It works like this:
Your employer signs up to the scheme, and this I'm afraid determines which dealers you acn use.

Essentially your employer buys the bike and hires it to you under a "salary sacrifice" arrangement. You pay for the hire of the bike out of your GROSS earnings, in other words BEFORE you pay tax. That money at the top of your pay packet would normally have been taxed before it reached you, so in effect you are saving the income tax you would have paid. For a 20% tax earner you therefore save £20 per £100 of the bike's value, or a top tax earner saves 40% of the bike's value. Then there's an adjustment made on NI contributions in your favour.

You must agree to use the bike principally for commuting to or from or at work, but of course you are allowed to use it for leisure purposes. You are not at liberty to dispose of the bike throughout the hire period, but once the hire period ends you have two choices. 1. is to give the bike back to your employer and walk away (having paid a disposal fee equivalent to 5% of the bikes capital value) or 2. pay the employer a figure roughly equivalent to 5% of the bike's capital value and keep it.

I have just bought an £850 bike and in real terms pay just under £40 a month for it for 12 months (although the GROSS figure is nearer £80 a month). Luvverly.

 

[grhm]

Buzzy,

The general gist is that your employer buys the bike (costing £400, using your figures). You then use the bike to commute to work - it's not clear to me how often you are supposed to do so, nor if/how they police it and I know some have used bike2work schemes to buy bikes that have never been used (or intended) for commuting.

Your employer will expect you to pay back the money they spent on the bike (~£350 - not including VAT, which they'll claim elsewhere). This will be taken from your pay over a set period (normally 12 months but I think the government rules allow other periods). So you are docked ~£30 a month - but this comes out before Tax and NI, so your "take-home" figure is only about £20 a month lower. Hence the £240 (12x£20) cost to you for the £400 bike.

The employer owns the bike thoughout the scheme. At the end, they will* sell it to you for it "market value". This is usually something like 3-5% of the initial price (so £20 for your £400 bike). However, the company cannot state what this figure will be up front - apparently doing so makes it effectively a Hire-Purchase scheme and therefore loses the tax/NI breaks of the bike2work scheme.


* Technically, they don't have to sell it to you at the end of the scheme - but they aren't likely to want it. My employer in the past has given people the choice of buying the bike for £20 or paying and admin/courier fee of £60 to have the bike returned to the employer. No-one has yet opted for the more expensive, take my bike away option...

EDIT: Pretty much what Cubist said above - just took too long typing to notice he posted.

 

[grhm]

You must agree to use the bike principally for commuting to or from or at work, but of course you are allowed to use it for leisure purposes.

If that is the wording of the legal agreement, then in theory, you could probably claim it was used principally for commuting if you commuted on it 3 times in the year and only used it once for leisure. How anyone proves this though...

 

[buzzy bee]

Hi

I have a mountain bike I use to go to work on, so wouldn't really be wanting to use it very often to go to work on, so maybe it is not worth doing for me! I would still be cycling though, so in effect I am still saving air polution and other things, the scheme is promoting.

I will have to find out about it with my employer, I would have thought they are taking part, as I work for a large-ish concearn.

Cheers

Dave

 

[Lazy-Commuter]

Dave
It works like this:
Your employer signs up to the scheme. <snip>

.. if you can get them to. I've been making a right pest of myself since February and we're still not signed up.

Don't worry too much about the using it for work, Dave: you're riding a bike to work - who's gonna know which one it is?

 

[buzzy bee]

Hi

I will put in the question tomorow, I am on holiday today! hehe

So if they are signed up, can you pick any bike, or are you limmited to predecided items?

What bike should I go for/try to get?

Cheers

Dave

 

[Lazy-Commuter]

Hi

I will put in the question tomorow, I am on holiday today! hehe

So if they are signed up, can you pick any bike, or are you limmited to predecided items?

What bike should I go for/try to get?

Cheers

Dave

Some comapanies limit you to Halfords, so I've heard. Though there are other suppliers which will allegedly take the voucher you are given so you can order through them. And Halfords apparently will also try to source any other bike that you wish and which they don't normally carry.

Other schemes allow you go to go any shop. I'm trying to get our lot signed up to one that supports a variety of LBSs in our area, including the one that I generally go to.

As to which bike to get, I'll leave that to older wiser heads for I know nothing of road bikes.

 

[buzzy bee]

Hi

They should try to suport local shops, over big concearns like halfords really in my oppinion!

Cheers

Dave

 

[VictorL]

I have a friend whose company runs this scheme - really annoying as if she buys the bike that I want, it will cost her £281 over 12 months (interest free) where as I have to pay £469.08 for it!!!!!

Am trying to convince her to buy it and then 'loan' it to me for a fee. I think she would do it but her partner is not so keen.

 

[Lazy-Commuter]

Hi

They should try to suport local shops, over big concearns like halfords really in my oppinion!

Cheers

Dave

Amen to that .. not to mention that most LBS are much better than most Halfords in terms of service, after sales support, setting the bike up, etc. etc. [/Generalising Mode]

 

[Wheeledweenie]

My company has signed up and it's encouraged a vast number of people to get a bike. Not all of them actually commute but there seem to be very few if no checks at all. It was the way I got my first bike and there's no way I could have afforded one otherwise. I'm now on bike number two and pay £25 a month for £500 worth of bike and accessories. Hurray!