Cycle to work scheme - any point?

[Guest2]

I have applied for a voucher at work through the Cycle to work scheme.

The allows you to use receive a voucher up to £1000 and then you will be subsidised £83.33 a month, meaning get the £1000 tax free.

You hire the bike from your employer and after 12 months you have the option of buying the bike from them or hiring it for another year.

The cost to buy is based on fair market value which used to be 5% + VAT for a bike over £500 and 1 year old. However it is now 25% + VAT.

Therefore if you want to buy the bike after a year, you end up saving nothing.

It also takes around a month from applying for the voucher to receiving it.

Would it not just be quicker and the same cost to get a £1000 bike on 0% finance, instead of using the scheme?

 

[Guest2]

Let's say you buy a bike for £1000 and you are in the 40% tax bracket. Because you haven't paid tax you are effectively getting a discount of 40% on the bike.

My bike was around £800 and I paid £53 at the end of the 12 months.

Also it doesn't take a month, it took me a week to get the voucher.

If you can combine this with the end of season sales before the new model comes out you can get some amazing deals. Also evans have tradein deals etc and you can use freecycle or buy a cheap £5 kids bike on ebay.

It's not as good as it was but still a decent saving.

Ok, lets say you are in the 20% tax bracket (In my eyes if you are in the higher rate bracket you can afford to buy a bike!)

Then the cost is £66.66 a month, so £800. Add on the 25% and VAT and it will end up costing you £1100!

I applied for my voucher last Wednesday, I have been told payment to Cyclescheme will be made Friday and from then it can take upto 2 weeks. 11th - 10th

 

[Guest2]

Most of the retailers only receive say 95% of the value of the voucher which striking a deal is tough.

Or they value the voucher at £900 instead of £1000 like PlanetX do

 

[Guest2]

...that took cyclescheme vouchers - £900 rrp reduced to £800.

My gross salary sacrifice amount was £66.67 a month, which amounted to a net monthly payment of £38.67. Over the 12 months I paid £464 in total.

That's all good if you are paying higher tax rate

20% you pay £53.33
40% you pay £40

The only way it would be workwhile was if I was to keep the same bike for 6 or 7 years, then the fair market rate would be negligible

I have just cancelled out the scheme.

 

[Guest2]

When I did it when it first started people were buying them and selling them straight on ebay. I think I paid 400 for a 1200 bike

This was the reason HMRC banged the buy back rate to 25% instead of 5%

Meaning people would lose out on £200 (payment of £60/£300 with VAT added)

 

[Guest2]

Whats wrong with a 20 quid bike?

Wheels drop off? Probably not ideal when flying down a mountain

I will be getting a mountain bike and using it for getting to work too

 

[Guest2]

You can get another bike a year after getting the first voucher.

I thought you could only get one bike at a time (i.e need to buy the fist one before receiving another voucher) At least this is what I was told by someone at work who is on their second voucher

 

[Guest2]

Either way, I have cancelled out the scheme now. I would have saved money only by hiring for 4+ years instead of buying the bike.

However I would have lost out on £50 as I would need to hire a bike soon for 2 days. I should also be able to get some discount if paying with debit card in one lump sum I expect.

 

[Guest2]

How do you work that out? You stop paying for it at the end of the initial term which is usually 12 (or in my case 18) months?

Whatever option you choose, you don't pay anything more once that term is over. Where did 4 years come from?

On a £1000 voucher (which I actually have to put £100 towards at Planet X as Cycle Scheme take 10%)
Payments of £83.33 a month, so £66.66 a month after 20% tax = £800 for the year. Then add on the 25% plus 20% VAT = £300 after 12 months of usage. Meaning I would have had to pay £1200 total for a £1000 bike

£900 (£100 + £1000 voucher for a £1000 bike + £800 for the year for the hire) + 7% = 963, £975.60 with the VAT on top of fair market rate

To me that's rubbish and should only be done if you are in the 40% / 50% tax bracket or cannot afford to buy outright


Age of Cycle
Acceptable disposal
Value as a percentage of original price
Original price of the cycle less than £500
Original price of the cycle more than £500
1 year 18% 25%
18 months 16% 21%
2 years 13% 17%
3 years 8% 12%
4 years 3% 7%
5 years Negligible 2%
6 years & over Negligible Negligible

https://www.gov.uk/government/uploa.../file/63929/cycle-to-work-guidance-update.pdf

 

[Guest2]

I would prefer the bike to be mine, what if I want to sell it on?
No, I actually want to spend £1500 but the voucher only allows up to £1000 (unless there is a certain license that financial service companies have that allows a much bigger voucher amount. Other companies can apply for this license)

Cycle-Scheme didn't make £4million of profit last year for no reason!...

http://www.planetx.co.uk/cycle-scheme

An admin fee of 10% applies with cyclescheme.co.uk, On Your Bike and Bike2work vouchers, as well as Salary Extras. A 12% fee applies with Cycle Plus vouchers and a 12.5% fee applies with the NHS SME HCI scheme.

We keep our prices competitive by selling at very low margins. All of these third-party organisations charge us a fee on each bike we supply to a customer for administering the scheme on behalf of your employer. We pass this exact charge on to you without adding anything extra ourselves because our pricing is too low to absorb it. The additional charge DOES NOT APPLY if an employer is paying us directly for the bike.

 

[Guest2]

Did you not say you are saving 1k a month in some thread? Just buy the bike outright and be done with it. You're putting way to much thought into this.

Use the scheme or just buy the bike, don't over think it.

Not this month unfortunately, I have dropped hundreds on other things

I like to put thought into things, it makes them more worthwhile

 

[Guest2]

Yes, most bike shops will let you pay what you want plus the voucher. However financial services companies can give out vouchers much larger than £1000.