Cycle to work scheme

[tjw_78]

My company has just joined a cycle to work scheme.

While I can see its value generally in getting people out of their cars and onto bikes, I don't see any advantage if you are thinking of buying a bike.

The scheme shouts 'save 40% on the cost of a new bike'. But as far as I can tell this is wrong, or at best misleading. It should say 'hire a bike from your employer for a year at 40% less than it would cost you to buy it'. All well and good, but what if you do actually want to own the bike? In that case there seems to be no reason to enter into the scheme

Have I understood this correctly, or am I missing something? (Quite possible! )

 

[cyberknight]

At the end of the scheme you make a final payment to "buy" the bike at its current resale value .

At the end of the day you get a new bike on interest free credit and still make a saving on it.

The guide for final fee is 18 % for bikes lees than £500 and 25% >£500.

Some companies ( like mine ) declare to the government that they have given you a tax gift to that value and you pay whatever your tax rate is on that final figure...

E.G.

The bike i going for costs £800

I pay pre tax £60 a month but after tax +NI saving it works out at £42 (approx) for 12 months

Admin fee £30

Final fee = 25 % of £800 = £200 but i only pay my tax rate on that as my company are doing the taxable benefit , at 20 % tax rate = £40

£42x12 =£504
admin fee=£30
tax fee=£40
TOTAL COST = £574 for a £800 bike.

If your company hits you with the full payment it still works out cheaper than buying from the shop and you get to spread the cost over the year.

 

[tjw_78]

So effectively you sort of pseudo-own it for a year, and then get to buy it? Hmm, ok.

I've been quite honest with my employer in initial discussions, pointing out that its unlikely that 50% of its use will be for commuting (as I often work from home, and I have to ge the train into London when I do go in, so we're just talking about the short trip to the station here, 2 or 3 times a week). Also I want to get a proper road bike, which I intend to use a lot at the w/e. As I see it this means I technically wouldn't qualify, but my employer doesn't seem bothered by this.

Any comments on this?

 

[BSRU]

To effectively you sort of pseudo-own it for a year, and then get to buy it? Hmm, ok.

I've been quite honest with my employer in initial discussions, pointing out that its unlikely that 50% of its use will be for commuting (as I often work from home, and I have to ge the train into London when I do go in, so we're just talking about the short trip to the station here, 2 or 3 times a week). Also I want to get a proper road bike, which I intend to use a lot at the w/e. As I see it this means I technically wouldn't qualify, but my employer doesn't seem bothered by this.

Any comments on this?

I would imagine it is very difficult, near enough impossible, for HMRC to actually know how much you will be using it for commuting and non-commuting rides.

 

[exbfb]

In my case.

My effective payment per month is equivalent to 1/12th of 57% of the sticker price.
That's after deducting the tax saving.

So, for my £500 bike, I pay £23.75 a month.

Over the year, that's £285.

After the year, I get the bike as a BIK and pay tax and insurance on that BIK.
If the bike is deemed to be worth 18% of the new price before VAT, it's deemed to be worth £75.

I pay tax and insurance on that £75 BIK.
I reckon that's about £23.25 all in, or less than £2/month in year two.

So, my £500 bike has cost me £310 all told.
I also got it interest free and without entering a credit agreement of any sort.
I don't reckon that's a bad deal at all.

Mine was done through halfords but didn't have to come from their range.
I ended up getting one from Alpine Bikes in Glasgow, with Halfords doing the paperwork.

Regarding use for actually getting to work.

I use mine to cover some of the distance some of the time.
I'm in a car sharing scheme too and drive one week in three.
The other 2 weeks, I use my C2W bike to get to my lift point.

This is perfectly legitimate.

 

[cyberknight]

I have yet to see our employer enforcing the scheme, this is the 4th year it has run.

technically it should be used for commuting but i am sure your boss has better things to do than see if you came on your bike

As long as you stay below the limit ( £1000 normally ) it is possible to have 2 bikes , a raod bike and a folder for the train .....

What bike you can have will also depend on the particular scheme provider, my company uses Halfords so i can only comment on them but they can supply non Halfords bikes like trek,specialized etc on order.
Ohter providers will have their own range of bikes to choose from.

I did look at a trek 1.2 , an specialized allez sport or a cannondale synapse but i wil be going for the Boardman as it offers the most bang for my buck and i know enough about bike set up to be able to sort out any niggles.

Halfords do have a bit of a bad reputation dependent on what store you have locally and the level of training the staff did not get ( luckily my local one is good as a mtber is a mechanic )

 

[Norm]

HMRC have confirmed that there are no requirements to keep records of the use (the wording is "Employees are not expected to keep mileage logs") so they can't even ask you to produce their evidence for them.

 

[mcshroom]

The terms Cyclescheme have offered me (my rental period ends this month ) are a one off payment equivalent to 7% of the purchase price to 'loan' the bike from them for another three years, and then I aquire the ownership of that bike (for free) at the end of that period

Seems a strange way round the new HMRC guidance but considering I thought I was getting a 25% bill I'll take it

 

[Atyl1972]

Yes you simply make the savings on the Gross salary not Net, so taking into account N.I. contributions and obviously Tax, this is a saving to be had, then at the end of either 12 or 18 months you have the option to buy off the employer at a one off payment of £500 bike = 18% or £500-1000 25% i believe, this will be transferring ownership to yourself, hope this helps....

My company has just joined a cycle to work scheme.

While I can see its value generally in getting people out of their cars and onto bikes, I don't see any advantage if you are thinking of buying a bike.

The scheme shouts 'save 40% on the cost of a new bike'. But as far as I can tell this is wrong, or at best misleading. It should say 'hire a bike from your employer for a year at 40% less than it would cost you to buy it'. All well and good, but what if you do actually want to own the bike? In that case there seems to be no reason to enter into the scheme

Have I understood this correctly, or am I missing something? (Quite possible! )

 

[crumpetman]

Once you have a bike on a cycle to work scheme, do you get any paperwork to show that you are in possession of said bike? And at the end of the hire period if you take ownership do you get something to say it is yours?

 

[QuickDraw]

My hire period end this month.

We've been given 3 options:

1. Pay 10% admin fee and hire the bike for another 5 years and then you get to keep it for free.
2. Pay 21% and keep the bike now.
3. Pay 10% admin fee and hand the bike back.

Seems fair enough to me given the new guidance from HMRC but... a couple of months into the hire agreement the bike was stolen. It's slightly irritating (that may be an understatement) to have to pay for a bike that was gone long ago.

Does anyone know what the rules are in this circumstance?

 

[kenuk1]

I offered it to my lads at the start of the scheme and it's been a huge hit, at the end of the day, I put a max value of £600 per bike, 3 employees per month, spoke to a local bike shop who also loved the idea (go figure lol) he offered free helmets as I instructed all my lads to go to the same shop, all Scott bikes so quality was fairly good.

As far as stolen, most of the paperwork stipulates you "should" take out insurance, indeed we offered it but not many took up the option, I think employees want the best of everything, as I say, the deal from Cyclescheme is good, dont complain about stolen etc, its just the same as buying a mobile phone, you should insure it but not many do..

My ramble results in me giving a thumbs up to the scheme, I see no pitfalls!

 

[2Loose]

If the bike is stolen then transferral of ownership fee is not required.
Obviously you must still pay the 12 months agreement...but there is nothing to transfer at the end so no final payment.

 

[QuickDraw]

z

If the bike is stolen then transferral of ownership fee is not required.
Obviously you must still pay the 12 months agreement...but there is nothing to transfer at the end so no final payment.

Thanks. I'll take it up with HR and see what they say. Their argument at the moment is that since the bike was insured I get the same tax benefit but none of the options make sense when the bike has been stolen.
I'd still recommend the scheme to anyone thinking about it.

 

[Norm]

Does anyone know what the rules are in this circumstance?

The insurance responsibility should be clearly laid out in your policy documents.

If the bike is stolen then transferral of ownership fee is not required.
Obviously you must still pay the 12 months agreement...but there is nothing to transfer at the end so no final payment.

There might be nothing to transfer but you have lost a company asset and your employers could argue that failure to insure company property was gross misconduct.