cycle to work scheme

Nodiggidy123

Nodiggidy123

Nodiggidy123

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In a effort to get fitter and reduce transport costs, I'm looking at taking advantage of the govenments cycle to work scheme.

however I'm not sure if I'd benefit from it.

basically you can hire a new bike from your employer at the retail cost less VAT which i can pay back in instalments over 18mths from my salary before i pay tax and NI.

after the 18mths is over i then have the option to buy the bike. but from what i understand depending on the initial value of the bike is either 16% or 21% of the original value + VAT

i must be missing something here as it seems i'd effectively be paying for the bike and then paying a further 16 or 21% + VAT.

anyone used this scheme before? have i got it wrong? as the scheme seems pointless to me.

heres my employers link explaining it.

https://www.salary-plus.co.uk/Portal/Pages/FAQs/CyclePlus.aspx
 
I used to administor our companies scheme before it all got centralised. I think I am correct in saying that VAT is now not saved. I'm sure there was a case in the EU that screwed this up and VAT savings cannot be applied to any salary sacrifice schemes. Something like that and something worth looking into. If your company are still passing it on then bonus but they may end up with some issues with the taxman if this is the case.

We went through www.cyclescheme.co.uk for our employees. The reason for this is that at the end of the initial 12 month hire period you get three options. One is to purchase the bike for either 18% or 25% of its original value. The second option is to hand the bike back and the third option is to extend your hire period so that the total hire period would be three years and seven months. You place a deposit down of either 3% or 7% (Think those figures are correct). Of course you choose option three, its the cheapest after all!

After a total of three years and seven months cyclescheme contact you giving you two options. First is hand the bike back and we return you your deposit. Second option is you keep the bike and they keep the deposit. This way you end up getting the final payment down to either 3% or7%.

You need to find out who your company uses for the scheme and the options they have in place. Most schemes put something in place when HMRC screwed everything up by saying no bike is worth only 5% of its original value after one year. Thus the extended hire period is now used by many schemes I believe.

Hope this helps and makes some sense to you.
 
I reckon it's worth doing, though I would agree that it's not that clear as to how the financial side of things is going to work out until you actually do it!

To give you a real life example, I bought my bike for £699, had about £58 before tax taken off my wages for 12 months then was offered the option of transfering ownership to myself for £175 or pay a refundable deposit of £49 and keep the bike for 3 more years. I would imagine that in 3 years time the bike will have depreciated somewhat and I will probably get to keep it for the value of the 49 deposit. Much as you do pay the full value of the bike back over 12 months it's important to remember that this is before Tax and NI so it's a reasonable saving.

In my opinion it's also sensible to use it to get a fairly decent bike if you will be keeping it for a while, a few of my colleagues have used it to get £200 bikes, which seems a bit pointless to me!

Dave
 
If you search in the Sports section of OCUK, there are lots of threads on Cycle To Work Schemes.
 
was thinking of doing this, as i ride 7 miles a day to work and then 7 miles back

and the bike im using isn't even mine (and its ****e)

i really need to find out if my company do this.



and with this scheme even if you do pay a little more on top because of VAT and ****. it will still work out cheaper than getting fiance form a bike supplier. and its more convenient than spending a lump sum on a bike
 
First of all you pay less tax and NI. The payments are taken before Tax and NI are deducted. Ive done 4 of the schemes and you endup all in all on a £1000 bike paying around £750 - £800 once you've paid your % to buy it.
Over the 4 years the amount i have had to pay to buy the bikes has changed so much. The first 3 years it was reletively low, £30 - £55 but last year i had to pay 25% on £1000 = £250. I ended up extending the hire for another 12months and had to pay £70. After that 12months is up im not sure what % i will have to pay to buy - i may have to pay another £70 to extend for another 12months but after 5yrs the bike is mine for free.
 
Before the VAT ruling you ended up saving about 36% and this included the 3% or 7% final payment.

Now I believe you will save a total of about 26%, again this includes the final payment of 3% or 7% (as long as your company provide this option). So it is still worth doing as you not only make a saving but you get to make the payments interest free over 12 months.

Teulk, you should only pay one deposit to extend your hire period for HOWEVER long it is. If your company ask for more then they are simply being money grabbers. With cyclescheme you simply pay a ONE off 3% or 7% deposit to extend your hire period so the total length of hire is three years and seven months. At the end of that they simply keep the deposit and you keep the bike.

Being an administrator though I had the employees interest at heart and wanted to pass on maximum benefits to the employee. Some companies it seems are all too happy to try and cash in on the scheme for themselves a little bit :(
 
I've got one at the minute, I can either hand the bike back at the end of the year, pay a percentage of the price to retain the bike, or pay a nominal fee of like £30 to extend my lease of the bike for another few years (no extra payments) after which the bike is mine.
 
I've been on it 3 months now.
I borrowed £850 and they take £70/month out of my wages but because of my lower tax and NI it works out at £46.
My end payment will be anything between 0 to 7%.
 
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