Confused with cycle to work scheme

hughesey · 15 Apr 2011 at 13:50

Hi people, I'm a bit confused by the cycle to work scheme by the government.

Our company doesn't do it yet, but apparently its been brought up a few times, so a few of us are trying to get a bit of info together to go back to the board of directors..... so.......

Went on www.cyclescheme.co.uk/ entered my details for a £500 bike plus £50 helmet & £50 accessories.

It came back with (well as far as I can see) work will pay £345.66 upfront (again showing the 40-50% saving which was quoted).
Then I would sacrificie £28.81 p/mth for 12 months our of my wages - which is £345.72 (so this in theory pays back work).

Is the bike mine then after the 12months?
Only it goes on about 3% deposits for a further 3 yrs but then after this you get your deposit back?

When would I actually own the bike? or would I never??

Any help on this would be greatly appreciated!
:confused:

Maximum Triceratops · 15 Apr 2011 at 13:51

You have to pay a final deposit if I remember correctly, I looked into it a while back and decided to get a second hand one from Fleabay, worked out better.

#Chri5# · 15 Apr 2011 at 13:54

Try the FAQ?

Who actually owns the bike?

The bike and goods remain the property of the employer throughout the hire period, unless the employer uses a finance company to fund the bikes; in this case the finance company or funding bank will own the bikes.

What happens at the end of the hire period?

At the end of the hire period employees may be given the opportunity to buy the bike for a full market value, however this cannot be an automatic entitlement. The cost of full market value cannot be stated before or during the hire period as this could be considered a benefit in kind and therefore not be eligible for tax benefits. Many employers opt for Cyclescheme to take ownership of the bikes at the end of the hire term, in which case any offer sale to the employee will come directly from Cyclescheme.

sHo0sH · 15 Apr 2011 at 13:56

It depends on your work. Officially they own the bike but can sell it to you for whatever price they like at the end.

#Chri5# · 15 Apr 2011 at 14:06

sHo0sH said:
It depends on your work. Officially they own the bike but can sell it to you for whatever price they like at the end.

Not really. HMRC have a table which details acceptable disposal values. A sub £500 bike is 18% of the original price after one year.

If employers chose to use lower values, it would remain open to HMRC to challenge these and the employer or employee (as appropriate) would need to be able to provide evidence in support of these values

hughesey · 15 Apr 2011 at 14:07

Lol.
I'd read all the FAQ's.
But, I was still a tad confused.
I expected that simply after the 12months - I'd own it, end of.

Simple enough - then at the end of the hire period it'll be down to the company to either sell it me @ full market value, or it went back to cycle scheme and I paid a refundable deposit of 3% of value of bike (which say is about £15) for another 3 yrs and then cycle scheme may offer it to me then again at a knocked down price at the end of that 3 yrs??

Does that make any sense?

hughesey · 15 Apr 2011 at 14:10

Not sure how you do quotes -
3. How can employees still make a saving?

At the end of the hire period, Cyclescheme will contact employees to discuss the options available.

The most attractive option for employees will be to pay a small, refundable deposit (3% or 7% of the equipment value*) and continue to use the bicycle for an extended period of up to 36 months.

At the end of this period, if the employee does not wish to keep the bicycle, then Cyclescheme will refund the deposit in full. Alternatively, Cyclescheme may at its discretion, offer ownership of the bicycle to the employee at this point, and no further action or payment will be required if they wish to keep the bicycle.

jas72 · 15 Apr 2011 at 14:21

So you get a 500 quid bike for 345 payable in installments? Not bad.

hughesey · 15 Apr 2011 at 14:22

C'mon peeps. Am I correct?

Wicksta · 15 Apr 2011 at 14:27

Yes you are, I got a bike on our scheme at work. I paid something like £20 after the year was up.

[DOD]Asprilla · 15 Apr 2011 at 14:31

Wicksta said:
Yes you are, I got a bike on our scheme at work. I paid something like £20 after the year was up.

Yup, but times and rules have changed since then. There are now minimum buy back values, as stated above.

#Chri5# · 15 Apr 2011 at 14:32

Wicksta said:
Yes you are, I got a bike on our scheme at work. I paid something like £20 after the year was up.

Which is exactly why HMRC stuck their oar in.

Showboat · 15 Apr 2011 at 14:33

hughesey said:
C'mon peeps. Am I correct?

No, you aint.

I did a lot of research on this last year and 2-3 years ago this was a great scheme, you got a £500 bike for £300ish with a £20 payment at the end.

Last year HMRC changed the policy, they are saying that a 1year old bike is not worth £20, you must now pay 20ish% of the value at the end.

When you factor that in, theres not much of a saving 10-20% maybe.

If you get a bike at the end of year / season sale (sept-dec), you can pick one up with 30-40% discount as shops look to get rid of them. This is the route i ended up going down.

Wicksta · 15 Apr 2011 at 14:33

Oh right, sorry.

hughesey · 15 Apr 2011 at 14:45

Damn it.
This was what I was expecting.
Cheers guys.

Special thanks to David Cameron - SPOON!

#Chri5# · 15 Apr 2011 at 14:46

What does Mr Cameron have to do with this?

hughesey · 15 Apr 2011 at 15:48

He and his buddies came in and amended all the rules.
Under labour, it was completely different.

Last year I got a £700 bike using a Cycle Scheme voucher, and expected it to end up costing me around £400. We know from the comments that hundreds of you have signed up to similar deals, riding away brand new bikes which you thought you were getting at up to a 50% discount.

Alas, Her Majesty's Revenue and Customs has decided to spoil the party by changing (or at least clarifying) the rules, which means the lovely £1,000 carbon road bike you signed up for might not be quite the bargain you anticipated. Doomsayers suggest this could be the end of the very popular scheme.

What HMRC has done is expanded its "fair market value" guidance for the worth of secondhand bicycles. This matters because although most people think the bikes they get on the Cycle to Work scheme are theirs to keep from the moment they wheel them from the shop, the small print says they are actually hiring them from their employers. At the end of the scheme (which usually lasts 12-18 months), employees are given the opportunity to buy back "their" bike for "the full market value". Many firms have been suggesting for years that the full market value would be 5% of the original price tag. On that basis I expected to owe the Guardian £35 in November, when my participation in the scheme ended.

Under the newly clarified rules, detailed here, I am going to have to pay quite a bit more. And so is anyone else partway through the scheme, as well as anyone who signs up in the future. That's because the killjoys in the tax office have decided that a bike worth more than £500 new will be worth 25% of its original value one year on. So my £700 bike will be worth £175 on its first birthday. Truth be told, it's probably a better reflection of its actual worth, but it's still a whopping £140 more than I was expecting.

Street · 15 Apr 2011 at 17:16

Showboat said:
If you get a bike at the end of year / season sale (sept-dec), you can pick one up with 30-40% discount as shops look to get rid of them. This is the route i ended up going down.

This is similar to what I ended up doing.. Looked into the scheme but it seemed unnecessarily complicated for the saving.

Ended up getting a 6 month old bike £1k bike on Ebay for £500!

BeanBandit · 15 Apr 2011 at 18:11

hughesey said:
He and his buddies came in and amended all the rules.
Under labour, it was completely different.

No its wasn't completely different. There was a loophole in the scheme, that loophole has now been closed, by HMRC.

Gixer · 15 Apr 2011 at 19:42

The scheme is still perfectly viable. I am our works administrator and Cyclescheme have resolved the problem that HMRC put in the pipeworks last year. All I would say is check who is dealing with the sale of the cycle at the end of the hire period. If it is your company and they intend to sell it at the end of 12 months rather than creating an addendum and extending the hire period you will have to pay 25% as your voucher is over £500.

If cyclescheme deal with the sale of the cycle however after the initial 12 months they shall contact you and give you three options. 1 is to purchase the bike for 25%, 2 is hand the bike back to them and 3 is pay a 3% or 7% deposit to extend the hire period to take the total hire period up to 31months. In your case it will be 7% as your voucher is over £500. At the end of the 31month hire period cyclescheme will then contact you asking if you wish to purchase the bike or hand it back. If you chose purchse they offset your 7% deposit against the price to buy it and the bike is yours. So after making that deposit payment there will be no more payments to make, 13 payments in total.

The savings you have listed are correct however if your works dont pass on VAT savings, most do, then you will not save as much.

Your deposit payment to extend the hire period shall be £42. After everything is paid that needs to be paid you will have saved about 36-37% on the rrp of the goods.

The other good thing about letting cyclescheme deal with the sale of the bike is that after one year you can also get another bike as your original contract between you and the company you work for ends and it becomes a contract between you and cyclescheme during the extended period.

So it all depends on who deals with the sale of the bikes and if it is your own company what they have chosen to do. You'll have to find out and make a decision based on that. Based on the fact I wanted the best deal for the employees and to still encourage people to cycle I handed back the sale of the bike side of things to cyclescheme when HMRC stuck the spoon in the pot.