How £500 became nothing.

thebikeliker

Save 50% on the price of a new bike it said, Up to £1000 value.
I'll have some of that! So off the Cyclesheme.co.uk
I put my salary details in and it says 34.5%.
That's not 50%.
I see, 50% is for rich people on higher tax rating.
I am not rich so I get 34.5%.
That's £345. Still not bad.
"Don't forget that you have to pay around 5% at the end of the hire period."
Ok. So I'm saving £295 instead of the the £500 I originally thought.
Bit disappointing but never mind.
I start looking at bikes for sale with a vengeance. THAT'S the one I want!
I go to my bike shop and get even more excited when I see they have it for sale at 20% off.
That's £800. Even more saving I think, but I am wrong.
We can only sell bikes in the scheme at Recomended Retail Price they say. Which is £1000.
"So I can come into the shop and buy the bike for £800 cash or through the scheme for £1000?"
"Yes."
"Which after tax free savings is £705."
"Yep."
"So I'm really only saving £95."
"Aye."
And it takes a month for the company to deal with the paperwork.
And it takes about two weeks for Cyclescheme to do their bit.
And if I leave before the end of the year I have to pay up out of net pay (take home pay), not gross pay.
And you should insure it, because until the end of the year's hire period it still belongs to your employer.
How much is that?
Yes: you guessed, £95.

MarvintheAndroid

You have restored my faith in the ability of government to totally fick things up.

Well done.

Marv

graham_g

Right, seeing as this reads like a tabloid article...

Shop discounting an extra 10% for you over cyclescheme (who charge 10% commission)? Sounds like they are using Cyclescheme to charge rrp instead of 'street price' for their bikes - that's utter bollocks; change shop.

34.5% discount? Mate, sounds like you forgot to take the VAT off - unless of course you work for a registered charity etc. then it's just tough. The smallest (and most likely) discount is 43% for lower rate tax payer - I'm just about to pay off the final amount (£30) which takes that down to 40%. You can download a savings xl sheet from Evans IIRC.

Likelihood is that your house insurance covers the bike - if you feel the need for bespoke cycle insurance then you obviously just like to spend money (there's guys on here with £10k+ worth of bikes covered through their M&S home policy for no extra cost).

There really is no need to be such a miserable bugger now is there? As far as the policy goes, it's never going to be wonderful as there are always pifalls and downside which generally only affect the minority - be thankful it's there in the first place!

PrettyBoyTim

At my company they decided not to do the cycle to work scheme stuff. The opinion of the HR folks was that in many cases it just wasn't worth it. As the money comes from salary sacrifice, it can reduce the amount that goes into your pension (the cost of which will increase over time due to compound interest), and it can reduce the amount you can get from bonuses. You also need to purchase the bike from your employer at the end.

What my company does instead is offer interest-free loans to employees, in much the same way that they will loan people money to help them with the cost of a all-year travelcard. Sure, it doesn't get you the 'discount' that the Cycle to work scheme does, but it does mean that you can shop around and buy your bike through any source you like, and you still get to spread the payments over several months.

thebikeliker

34.5% Try it yourself.

http://www.cyclescheme.co.uk/employee,calculator.htm

£1000 bike
£35,050 salary (I know what you're going to say. If you're earning that much then you shouldn't need a saving. That's as maybe, and is a different issue).

Shop discounting an extra 10% for you over cyclescheme (who charge 10% commission)? Sounds like they are using Cyclescheme to charge rrp instead of 'street price' for their bikes - that's utter bollocks; change shop.

I have. Two have said the same. The third said that I can have a discounted bike but the discount will be reduced by 10%. So, a bike that is for sale at 20% off will be 10% off with cyclesheme. This fits in with your comment on what is charged by cyclescheme.

As for the insurance I asked my company why they insist on separate insurance and they pointed me to this on the cyclescheme site

First of all check any home contents policies that are in place to see if they cover the bike for trips to, from and whilst at work. It is also very important to check that the existing policy covers the value of the bike as many standard policies only extend to £500

If you've got a good deal then I'm happy for you (even though you called me a miserable bugger), but I'm just saying what happened when I tried to get the 50% savings advertised.

My point is that while I thought this was going to be a great saving it has turned out to be much, much less.

dsmiff

Took out £1000 with the Halfords cycle scheme at work, work for a financial institution so no VAT reclaim (don't go there) but am a higher rate payer so save 40%.

Halfords give you an additional 10% off so had £1100 to spend, purchased an I-drive XRC for 899 and added £79 to purchase a Carrera Valour road bike (an accessory for the i-drive ).

Also got £30 in vouches when I brought the valour, so brought full mudguards, grease and oil for the bikes.

I for one couldn't be happier!

Oh and I do cycle to work everyday.

_____________________________

Ghost Donkey

On the RRP side of things, I had a standard email off wiggle with a link to information about buying a bike from them using this scheme at the bottom. They claim that the bike doesn't have to be sold at RRP and include the 10% discount they currently offer as part of the saving. It goes on to say that if your employer pays by cheque then the discount won't be applied. If wiggle can offer sale prices then surely LBS can too, unless employers pay by cheque as standard.

On the plus side, if you haven't got the money up front then at least it's an interst free loan even if there is no saving.

graham_g

My apologies - I can understand that it's frustrating and misleading - I get 43% as my company is generous enough to pass on the VAT saving. My LBS is a registered charity (part of a blind school that trains students up and all profits go into the school -means good honest advice as there are far fewer commercial pressures) so I don't tend to even ask for a discount.

My somewhat kneejerk reaction is due to the number of peole who start threads moaning about 'what if the company charges a fortune at the end of the period?' (my personal favourite - I'm sure our employers want a pile of used bicycles on their books for the end of year audit!) or 'halfords can't get this' 'why does it have to be evans?'. There are many people who don't get offered this scheme at all.

thebikeliker

fIt gets even more interesting.
Hidden in the conditions is the following:

Bikes will be 'hired' (not bought) for 12 months with the cost of the bike/equipment, plus loan interest, being paid by the employee through salary sacrifice.

Plus loan interest?

My query about this has still to be answered.

graham_g

Man, your HR department hates you.

whiskywheels

......and just to cheer you up even more, the value of your pension scheme will also be slightly reduced due to the 'lower' salary whilst making repayments.

thebikeliker

I've got an answer to my query on the loan interest.

I expected them to say that it was a mistake but instead it turns out that there is a charge of 5% also to be added!

My company is a very large one and not a little back street one like you may be led to believe.

Anyone else know of a company that makes this charge?

BigWomble

thebikeliker wrote:

I've got an answer to my query on the loan interest.

I expected them to say that it was a mistake but instead it turns out that there is a charge of 5% also to be added!

My company is a very large one and not a little back street one like you may be led to believe.

Anyone else know of a company that makes this charge?

My company used to charge loan interest, but they've got rid of it payment. There are three savings on the salary sacrifice... income tax (you get this on the bicycle), VAT (you get this on the bicycle) and National Insurance (your company gets this). The idea is that the NI covers all of the company costs, including loan costs.

It would be simpler to make bicycles VAT exempt. This would spread the benefits more widely.

sbullett

Just got two bikes through Cyclescheme from JE James in Sheffield - they quite happoily allowed me to reserve a Giant SCR2 for £445 vs rrp of £525, just asked me to leave a refundable £50 deposit pending the 6 week wait for the voucher - looks like you need to shop around a bit more :?:

Not much you can do about VAT and loan interest etc, except change job

martinwitnam

So how do you find out if your company does this scheme?
I work for an NHS trust.

nwallace

NHS Trusts don't get the VAT off the price. (Not VAT registered so would be difficult to claim it back.)

The guy i sit next to has jsut been made permanent so went straight for the cycle scheme!

martinwitnam

Okay, the company can't claim back VAT but looking through the calculator I could still make a saving of around 30%.
How do I find out if my NHS trust will do this scheme :?:

nickcuk

Have any of you found a way to get the 20p per mile for business travel on the bike too ? I looked at the scheme and included a weekly trip to the warehouse ( 45 mile round trip ) - still didn't make much sense for me though

martinwitnam

Still like to know from those who have actually used this scheme, who do I need to contact within my company?

Panter

You will need to contact your admin dept (large firm) or just ask the boss (small firm)

We're just setting one up now.

FWIW, Cyclescheme do charge the shop 10% of the value of the sale. My LBS offered me 100 quid off of an 1100 quid bike untill he found out the charge from cyclescheme when he, very apologetically, had to withdraw his offer of a discount.

Wiggle can afford to do the discounts as,I believe, they organise their own scheme (its in their interests after all) whereas cyclescheme are an independant firm.

HTH

Chris

martinwitnam

Spoke to the travel department at my hospital and they said "The bike can only be used to make journeys to work and back home. It can not be used for leisure cycling. If any annual leave (holiday) is taken then the bike must be given back to the hospital for the period of the holiday. The bike must be returned to the hospital at the end of the twelve month period.!"
I retorted with "Yeah right!" and put the phone down.
Think I actually need to speak to someone who really knows what the scheme entails.

thebikeliker

Jeez, I thought my lot were clueless (they are) but your lot comes close! :roll:

Panter

martinwitnam wrote:

Spoke to the travel department at my hospital and they said "The bike can only be used to make journeys to work and back home. It can not be used for leisure cycling. If any annual leave (holiday) is taken then the bike must be given back to the hospital for the period of the holiday. The bike must be returned to the hospital at the end of the twelve month period.!"
I retorted with "Yeah right!" and put the phone down.
Think I actually need to speak to someone who really knows what the scheme entails.

Thats horrendous.

According to the cyclescheme website, the bike can be used for any leisure journey and only has to be used for 50% of your commute although neither you or your employer are obliged to provide any proof of this. The idea is for the employer to sell you the bike at the end of the hire period for a nominal fee, 5% is suggested but as far as I know it can be any amount (ie token gesture of a quid) and is more to formalise the end of the hire period.
They're under no obligation to sell it to you but it would make no sense for them not to, they've had the money for it and it would only create bad feeling with the employee.

I also have a feeling that its not legal for these firms to charge interest on the loan, or it makes the government scheme invalid, something like that. Its all tied in to avoiding the consumer credit act although I could easily be wrong on this (usually am :oops: )

Its always tricky with work situations though, if you kick up too much of a stink then you wonder what the consequences may be :shock:
I'm very lucky to have the boss that I have.

Good luck to anyone who's going for this scheme anyway 8)


Cheers

Chris

cygnet

Panter wrote:

According to the cyclescheme website, the bike can be used for any leisure journey and only has to be used for 50% of your commute although neither you or your employer are obliged to provide any proof of this.

Not quite: 50% of the time spent using it must involve a commute, c.f.
"The tax exemption only applies when an employee mainly uses the cycle and cyclists' safety equipment for qualifying journeys. A qualifying journey for an employee means a journey, or part of a journey,
* between his or her home and workplace, or
* between one workplace and another,
in connection with the performance of their duties of employment. So, for example, cycling to and from the station to get to work would qualify. (In this case, 'mainly' means that more than 50% of time using the cycle and safety equipment must involve a qualifying journey.")

From the Dft: http://www.dft.gov.uk/pgr/sustainable/c ... mentat5732
Martinwitnam, I suggest you ask if they've actually read the Dft guidelines, then send this link to them.

nickcuk wrote:

Have any of you found a way to get the 20p per mile for business travel on the bike too ? I looked at the scheme and included a weekly trip to the warehouse ( 45 mile round trip ) - still didn't make much sense for me though

The taxman says you can't use a cycle to work scheme bike and claim mileage, as it's not your bike. (same link; Item 13)

The bit that concerns me is the "approx 5% of its value" charge that your employer may wish to charge you for the sale of its bike, oft quoted in the scheme providers literature. As the same link (again) says "to prevent a taxable benefit in kind arising as a result of the transfer of ownership the employee must pay the employer the fair market value of the equipment."

I understand the 5% originated with the Home Computing Initiative, which seems to me reasonably fair for a 3 year old PC/Mac given the rate IT stuff devalues. Most of the bike schemes are run over one year. I seriously doubt a £1000 bike will be worth only £50 after one year, unless you have the most horrible commute in the world. One the bright side, this is actually only likely to decided by the courts.

Also the loss of any warrenty once you have bought the bike (second hand see) makes me think hard about it.

Sorry - long post.

thebikeliker

One point I have wondered about, and I apologise if it has been brought up before, but if the bike officially belongs to the company then would your household insurance cover it?

Knowing how some insurance companies will try to back out of paying if they possibly can will they not say that if you don't own it then they are not liable to pay if it is stolen etc?

Just wondered. :?
Ah; just found this -

12) Insurance
Employers and employees need to consider insurance. Even though employers own the cycles and safety equipment, it may be more practical for the employee to have the cycle covered under their own house and contents insurance as long as they advise their insurer that their employer has an interest in the cycle. Alternatively, the employer may consider adding them to their insurance agreement with their own insurers. This needs to be determined and set out in the agreement between the employer and the employee.

top_bhoy

Like all good ideas this one seems to have a fair few hidden caveats and interpretations -put alongside the reduction in pensionable contributions, it doesn't seem so great a scheme if you can get a well discounted bike elsewhere.

Panter

When you insure it you have to state that your employer has a vested interest in the bike.

Sorry, I haven't got mine yet so I don't know what it entails but I can't see it being a problem as long as they're aware of it.

HTH

Chris

wastelander

I'm about to use the Booost scheme to buy a 2nd bike, mostly for winter commuting. The savings quoted on their documentation completely fail to show any VAT relief, only that gained by a reduction in PAYE and NI contributions. Both Booost and my HR dept have gone very quiet about the whereabouts of the VAT savings! Even though, it's a way of getting a 2nd bike over a period with no interest and cheaper than I would have paid.

Also - if it's my salary that's being reduced, how can the bike belong to the company? Questions like that could keep you away at night! I'm sure that the 5% or whatever is just a peppercorn figure to complete the sale but it still makes you wonder

mea00csf

Completely unrelated but since the bike belongs to the employer and you are only hiring the bike, who's responsibility is it to keep the bike in good repair and serviced?? I'd say that it would be the companies, a sort of similar situation to landlords must keep a tenants house habitable. So if you did end up with that one random bike that turns out to be a lemon who's problem is it to sort it out?

alfablue

wastelander wrote:

I'm about to use the Booost scheme to buy a 2nd bike, mostly for winter commuting. The savings quoted on their documentation completely fail to show any VAT relief, only that gained by a reduction in PAYE and NI contributions. Both Booost and my HR dept have gone very quiet about the whereabouts of the VAT savings! Even though, it's a way of getting a 2nd bike over a period with no interest and cheaper than I would have paid.

Also - if it's my salary that's being reduced, how can the bike belong to the company? Questions like that could keep you away at night! I'm sure that the 5% or whatever is just a peppercorn figure to complete the sale but it still makes you wonder

I think this is morally wrong - the employer makes a bit through NI reduction (maybe offsets the minimal admin they have to do), NO WAY should they profiteer by swiping the VAT from you - I think they should be named and shamed. The scheme after all, is about encouraging cycle commuting, NOT to line the company's pockets!!!

RedAende

"also have a feeling that its not legal for these firms to charge interest on the loan, or it makes the government scheme invalid, something like that. Its all tied in to avoiding the consumer credit act although I could easily be wrong on this (usually am ) "

Any company can lend £1000.

To lend £1001 that company then needs a credit lending licence of sorts, hence C2W tends to have a £1000 limit. Not sure how that works when a co. gives another co. 60/90 days payment terms, guess it just applies to "consumers"


Also most schemes charge your LBS 10% of retail hence it is unfair to expect LBS to sell discounted bikes at a loss.

My company decided not to join, some health and safety bollocks about their liability if staff are injured in a road traffic accident.