Over the past week I've managed to switch to a healthy eating plan (very much needed) and brought myself my first road bike
Covered 36 miles on it so far with no issues at all (: Hoping to get Dad to follow suit - (any advice about the cycle to work scheme would be welcomed as that is how we would get his bike)
Depending on how your dads company works generaly speaking this is how it works..
Your dads company may use a third party supplier who will take a small admin fee or they may choose to adminster the scheme themselves either way it works something like this..
You go to the shop (or in some cases the web) and decide on what bike and accesories you want (certain accesories are excluded but the bike shop will advise) . Your dads company or whoever is administering the scheme will raise a purchase order or voucher to purchase the bike. They might do this directly with the shop or give your dad a voucher to take to the shop but before you get this you will need a quote from the shop so that should be your first task.
The bike does not belong to your father it is rented out by salary sacrafice it remains the propeorty of your company
Ggeneraly speaking schemes run over 12 months up to a maximum of 36 months your dads company will decide what period to run the salary sacrifice payment 12 months seems to be the norm
assuming your dad is a basic 20 percent tax payer
This is how the saving should work...
Cost of Bike £500 Company passes the VAT saving on to you Cost of Bike now £400
£400 is divided by 12 as thats when the tax year runs
Your would now have to repay the £400 via salary sacrifice however there are further savings because your dad willl be £400 a year worse off in his income he will save roughly £48 in national Insurance contributions and roughly £80 in income taxt therefore in real terms the bike now costs your dad £272 divide this by 12 and your dad should be £22.50 ish worse off in his bottom of his pay packet every month not bad for a £500 quid bike
But dont get too excited just yet...
There are some further fees to think about which will negate the overall saving. There may be a sheme administration fee can be as high as £75 but normaly around the £35 marker if there is'nt thats a big bonus however this is rare
The bike still belongs to the employer and after 12 months you either give it back or hire it out for a further period If you give it back there should be nothing further to pay if you keep it you will more than likely be expected to pay a further fee these vary but could be 7 - 10 percent of the original bikes value In this case 10 percent would be £50
At the end of the further hire period you could give the bike back and expect a refund of the fee or keep the bike and not get a refund of the fee
Schemes vary this is based on a couple I have been offered through my wifes and my own employer however i decided not to take up the offer
One thing to remember if the employer does not pass on the vat saving to you and consideraing the further fees you may be able to find the bike discounted on the web to almost the same value.
Its reported the goverment may be pulling this scheme in the near future therefore this kind of benefit would be taxable and hardly worth implementing however lobbyists are campaigning to keep the benefit in operation
The benefit limit CAP for any bike purchase is £1000
Hope this helps but please speak to your dads work schemes administrator to get the precise savings the above should only be taken as a guide
