Question on Cycle 2 Work Schemes

drgrr

Hi,

Apologies if I've missed this in other posts but has anyone been stung by their employer when they've reached the end of their cycle to work lease period? My employer is introducing the scheme in Q2 this year, and I though it would be a good opportunity to save money on a new bike, but I'm concerned that I could end up paying 60% of the RRP through my salary and then getting stung at the end when I try to buy it outright from my employer ( I work for a bank so that might explain why I'm so worried about getting screwed!).

I'm really keen to buy a new bike right now, but if I can save a wad of cash through the scheme then I'll wait a couple of months.

Cheers!

samuraiblade

it varies from company to company , i asked mine this question and they said after the terms up its yours to keep , which is good hence why ive taken up the scheme. i cant comment on your company , just ask the question imo.

turkeytickler

certainly sounds contrary to the spirit of the idea - if you a lucky enough to have an employer that offers access to the scheme I cant see why they would get chuck that goodwill down the pan by stinging you at the end...... i agree with samuraiblade - just ask em...

drgrr

Cheers guys - I guess the I'm just looking for a catch - the whole 40% discount just seems too good to be true!

redjedi

Do companies actually charge people at the end of their C2W scheme?

Thats's a bit tight of them! My company just said it's mine.

Aren't they already saving a bit on taxes as it comes straight out of your wages?

homercles

If you're worried you should get this agreed when you sign up. My contract with my company says that along with my final payment I pay a fee to transfer ownership of the bike to me. That fee has been agreed at £10.

RC21

I think it's something to do with how the scheme works - essentially you're leasing the bike from you company over a period (6 months, 12 months, etc) as they are the people who are buying the bike - after that period the bike is there's so they have to sell you the bike and at a reasonable depreciated value (usually between 1% and 2.5% of the initial cost) +tax

e.g.
If you paid £500 it would cost between £5 and £12.50 plus 17.5% tax after a year to keep the bike.

That's how it works at my company anyway

BigBlackShed

I just posted on another thread about this. I asked my employer up front what the final settling payment would be. On my £950 bike and gear, and considering I would of paid about £525 in leasing the bike for 12 months, they wanted another £450. That was what they said would be "fair market value"

Be careful of the "finance" department.

breszh

That seems a bit off to me.

Although my lot don't pass on the VAT saving, instead they keep it to cover the cost of running the scheme, even though they barely have to do anything to run it - I don't really see the reasoning behind this, given the VAT amount changes with the cost of the bike, but the cost to administer the scheme is static.

My company uses the cyclescheme leasing company. Lease the bike from them, at the end you have to hand it back and pay a fair market value for them to dispose of it or the same to keep it. I'm told the fair market value is around the 5% of initial purchase price.

Gussio

My lot levy a charge of £75 at the end of the term to cover "administration costs", which is 5% of the £1,500 ceiling amount.

Massimo

I'm coming to the end I've my first year on the scheme in April and I'll be paying the princely sum of £1 and the bike is mine. I though the 'standard' charge was 5% of the original cost of the bike. All I can suggest is that you check the terms of the scheme - I'm sure its detailed in there somewhere...

RufusA

Two things to help clarify this:

1) There CANNOT be any statement of how much the bike will cost at the end of the scheme. If there is a written stated intention for the bike to pass from employer to employee it becomes a Hire Purchase and not a Rental agreement. The effect being that all tax advantages are wiped out. You cannot / should not assume that you have a right to the bike at the end of the rental period!

2) HMRC have stated that there will be no additional tax payable if the bike is sold by the employer to the employee at "FAIR MARKET VALUE". People buying a 1 year old £1000 bike for £1, £10 or 5% are IMHO not paying a fair market value. BigBlackShed has probably the only employer who is charging a value which would not attract additional tax should the HMRC investigate.

As I have frequently stated the Cycle to Work scheme is a shambles of a bit of legislation adapted from the Home Computer Initiative without any thought or planning by the Government.

For 99.9% of people it works well, most people get away with it, HMRC don't at the moment care, BUT if the scheme was run to the letter of the law there would be no savings, as you are buying a bike twice over!

YMWV - Rufus.

Kafka\'s Doll

Rufus, surely the lack of policing on the scheme is one of the reasons its of benefit to cyclists. For instance, once you buy a bike I understand that it must be used for at least 50% of your journeys. But who's counting? My guess would be that there are people out there who, rightly or more probably wrongly, have new racing bikes and continue to commute on older shabbier bikes...

Needless to say, for any lawyers watching, I'm not one of them.

drgrr

In BigBlackShed's case it seems that there isn't actually an incentive to use the scheme as the final amount payable is more than the original cost, and I'd be very suspect of any verbal agreements that have been made with regards to what happens at the end of the term, as it's possible that there may be a shift in company policy, or a new head of finance who sees an easy way of increasing revenue!

Maybe I'm just too cynical!

Was the scheme initially sey up to ease the financial burden of buying a bike for those that would normally not be able to do so outright, or to encourage a fitter, more active national workforce, or to simply try and get more cars off the road? What are they trying to incentivise (is that even a word?)?

andywgg

It's not 50% of your journeys - it's 50% of the bike's usage.