Ride to Work scheme - Loan Interest?

thebikeliker

Does any other company charge loan interest in the Ride to Work scheme?

My company charges us 5% loan interest if we loan/buy a bike through the Ride to Work scheme.
In all of the messages on this topic in the forums I have not seen anyone mention this as an added charge.

Are they unique?

Please complete the poll as it give me ammunition to get this charge removed.

edwardvarla

The company will already benefit massively from gaining corporation tax capital allowances on the bike, which will more than cover the interest on the money it is advancing and the admin time. Trying to make money out of loan interest as well is pretty despicable profiteering on the company's part. Either that or they don't understand they get the capital allowances on the bike, which may appease them and be the 'ammunition' you need.

Cheers

Edward

passout

I understood that it is designed to be 0%, not sure if they are breaking any rules by doing this. Morally very questionable to say the least.

mea00csf

might be on completely the wrong track here but how can they charge loan interest???

The company buy the bike and you HIRE it off them via a salary sacrifice. There is no loan in place for there to be interest on.

Or am i completely off track there?

CarlosFerreiro

I did read the 5% figure in the guideance to companies on the Ride to work website, so it's officially allowed unfortunately... at first i was thinking it might actually be something of a grey area on tax matters, but aparently not. I guess it leaves the scheme as something that is only a good idea if you trust your employer - to give you all the benefits, and to go through with selling you the bike at a nominal value.

andrewgturnbull

Hi there.

Your company will also be saving employer's NI contributions on the amount deducted from your salary each month. I think this is around 10 or 11%

Cheers, Andy

thebikeliker

I've looked at the employer's guidance and unless I've misunderstood something they
stand to make a whopping £428 on each £1000 bike loaned.
This is made up of:
Reduced Employer's NI = 12.8% = £128
Capital allowance = 25% = £250
Final purchase = 5% = £ 50

Total = £428

The reason given for the loan interest charge of 5% is that they are using external finance to purchase the bikes.

Makes my saving of £136 over the price I would normally pay for a £1000 bike (£900) look a little weak.
Even if I paid the full RRP I would still have saved a lot less (£236) than the company has made.