How does the Cyclescheme work financially? : Because...

[RSV_Ecosse]

.....my employers have recently circulated an email saying that if you have purchased a bike last year then this year when the hire term finishes you will be barred from purchasing anything else on the Cyclescheme for a 2 year period.

Reason being is my employers say that they have to stand the purchase price of the bike from within their budget and then claim it back through the Cyclescheme afterwards. Because of budget restrictions anyone who got a bike last year will have to wait for 2 years now till they can buy another via the scheme. They also said that they under estimated the amount of employees who took part in the scheme last year and bought bikes ( surely that's a good thing?. Encouraging your workforce to keep fit and healthy = less sickness and injury = more productivity/higher performing employees? ) , not to mention the carbon footprint reduction if more employees are cycling to work instead of taking the car.

Is this how the scheme works, financially?. Or are my mob trying to pull a fast one?.

I got my bike last summer and the road cycling bug bit me deep. I'm now hooked and was looking to sell on my current bike once it was paid for this year and upgrade to a higher spec model. Now it looks like I'm screwed for doing that for 2 years. Bugger!!!.

 

[Downward]

Sounds correct to me - Cyclesheme are just administrators. Your company will pay for the bike upfront and won't recoup the cost until the scheme ends.

Cyclesheme get their 10% straight away from the LBS so they are fine.

Now before Cyclescheme Boost etc we did the Salary sacrifice over 3 years. Cue a lot of happy bikers going out and spending thousands on high end road bikes.
The same ones now are going through cyclesheme as that 3 years has come to an end.

 

[RSV_Ecosse]

Ah, right. So it sounds like my lots sign up to the scheme is a victim of it's own success ( looking at it in a selfish way I 'spose!! ).

In that case is this "barred for 2 years" a common practice?.

 

[Downward]

Not heard of this before.
You could shop around on the Net for an 09 bike now.

Personally being stuck to cyclesheme means I can only get what the shop have - No 2010 is available and they charge the full RRP due to cyclescheme charging 10%.

I save 25% so really you could look around for a + £1k bike over 36 months on Intrest Free and get just as good a deal.


I am just off to the shop today to get another voucher as my 12 months is up and fully paid for. Work have not said either way if this is ok but who cares ?!

 

[Crankarm]

http://www.timesonline.co.uk/tol/money/consumer_affairs/article6682864.ece

 

[andyfromotley]

LOL your employer doesnt sound the most avid fan of the scheme. Yes they have to shell out up front but of course they get the money back, it's not exactly a high level accounting technique is it?

I am not sure that they can actually impose any sort of ban on it as the eligibility may be set by the actual scheme itself, although whether of not you want to take your employer on over this would be your choice.

 

[upandover]

It's a voluntary scheme though, which means that if they don't want to offer it, there couldn't be any obligation on them to do so, surely?

Steve

 

[ed_o_brain]

Employers can pay workers up to 20p a mile tax-free for using a bike rather than a car when they travel for work reasons. However, if you get your bike through Cycle to Work, you cannot be paid for using it for work.

Quote taken from news article to which Crankarm posted the link above.

I'm not convinced this is true. How does the cycle to work scheme have any bearing on expenses paid by the employer for business travel?

Is the employer even concerned which bike I use for business travel? The one I bought through the cycle to work scheme or one I bought directly myself?

 

[HLaB]

My employer joined the scheme just under a year ago but Ive only got round to getting a bike now I hope I don't have to use it for work too much! the ridgeback hybrid does that. I wouldn't be surprised if my company done the 2 year thing; their reason for not joining the scheme earlier was that if the whole office (around 40 people) came along wanting 1k bike that £40k they have to lay out.

 

[CopperBrompton]

I'm not convinced this is true. How does the cycle to work scheme have any bearing on expenses paid by the employer for business travel?

Because bikes bought under the Cyclescheme technically belong to the company until the final payment is made, so they are exactly like pool cars. You don't get a mileage allowance for using a pool car, nor do you for using a pool bike.

 

[Downward]

Because bikes bought under the Cyclescheme technically belong to the company until the final payment is made, so they are exactly like pool cars. You don't get a mileage allowance for using a pool car, nor do you for using a pool bike.

Although you have to maintain the bike you get through cyclescheme which implies that yes the bike is bought by the company but really you own it and thus you are responsible for it.

Another positive for the company using cyclescheme - No more expenses have to be paid.

 

[fossyant]

No expenses for a Cyclescheme bike is correct. That what happens at our place.

As for the company getting their money back, they get it back directly from you each month. For the company it's a cash flow issue, that's all. Doesn't affect the 'books' if accounted for correctly. I suspect they are stopping folk buying too many bikes - which is fair enough...

 

[CopperBrompton]

For the company it's a cash flow issue, that's all.

However, there is nothing trivial about cashflow in the current climate, with business credit almost impossible to obtain, so the final two words above don't apply.

Many perfectly viable businesses have been killed by lack of cashflow (eg. by their customers paying them late).

 

[VictorL]

The reason most businesses fails is due to cashflow reasons. If you had 100 employees and they all bought a £500 bike, you would lay out £50,000.

Most businesses wouldn't offer their customers the chance to pay over a year interest free would they? That is what they are doing to their employees.

That said, since the bike is 'owned' by the company there are certain tax advantages for the company.

 

[ed_o_brain]

Because bikes bought under the Cyclescheme technically belong to the company until the final payment is made, so they are exactly like pool cars. You don't get a mileage allowance for using a pool car, nor do you for using a pool bike.

No, but then again I'm not paying for a pool car via salary sacrifice nor maintaining it.