Why is cycle to work scheme so popular?

merlinghnd

Hello Everyone,

In my view the C2W scheme is great. I am on my second bike with it, started a new schedule as soon as the last one was finished. My company wanted 3% plus VAT of the loan ammount. I think you have to remember that does your company want to charge an excessive ammount and risk having all thier bikes returned after a year. Not sure if it has been said, but the company have to make this charge for tax reasons.

However I do have reservations. I am a higher rate tax payer so pay less than basic rate tax payer which is patently ridiculous. I use my bike to get to work but I feel this is a middle class tax break to enable people to have a mountain bike in their garage.

I feel that one day the Governrment will pull the plug on this scheme so I decided early on first of all to get a £1000 or so mountain bike and then a £1000 road bike, the most I am allowed on my scheme. Who knows what I might get next year if I can get away with it.

Also remember there was a similar scheme for computers to make the population more computer literate. Overnight after a Budget, the scheme was pulled because most people were buying gaming machines and joy sticks.

If you have a scheme, get onboard or start one ASAP, who knows what will happen in the future

Regards

JohnnyAllez

Monty Dog wrote:

Nitrous, you either work for a really bad company or have a very poor view of business - it's not 1983 anymore

It is where I work :shock:

Pat Murray

Brilliant scheme - just purchased my Ridley Noah with Campag Record - it helps if youre the MD and you have a consumer credit licence!

sturmey

The cycle industry as well must view it as a great scheme from their point of view as so many people (me included) are happy to buy more shiny new bikes which we probably don't need and which we wouldn't be buying at all if we couldn't get them for this sort of money.
I suppose I could find room for one more...

passout

NitrousOxide wrote:

I would love to know for curiosity sake, how many employees have been stitched up by their employers, when using these tax free cycle schemes.

During the salary sacrifice period (typically 12 months) of the employee, the bike is the property of the employee's company. Consequently, the bike should be insured by the employee duuring this period, in case of damage or theft. The company has no legal obligation to transfer ownership of the bike to the employee at the end of the salary sacrifice period for a token percentage of the bike's value, from what I understand.

I can picture a company's fat cats starting up a scheme, getting a significant percentage of the workforce to take up the scheme, but never transfering legal ownership of the bike to the person who specifically chose it! The management then request return of their property and then sell the bikes second-hand for some AGM bubbly!

I hope their is something I'm missing here from a legal point of view, but it appears that us employees could be so easily shafted?

Yes, you either take it on faith or don't. You right about the reasons why they can't confirm the final amount. In reality though why would an employer put on a scheme in order to get a few 2nd hand bikes or rip off employees for a few quid? Surely this makes no sense as it would demotivate staff and justify stealing from the company in the minds of many.They would have more to loose by doing that? I take your point though, technically it could happen however unlikely.

andy_wrx

Unlikely ?

To me it's completely this 'Fair Market Value' final payment fee to take ownership of the bike which is the problem.

Your company can't (officially, contractually) tell you what this fee will be, as that would then legally make it into a hire-purchase agreement.

If off-the-record they'll tell you what it is, and the scheme's been running for a year so you can see what other people have paid and it's a nominal sum, then great.

But there's someone here saying that his company charged him 10%

http://www.bikeradar.com/road/forums/vi ... t=12568453

http://www.bikeradar.com/road/forums/vi ... t=12536589

passout

10% - crikey! I spoke to our head of HR who made an unofficial £50 promise (my bike was £999). Ask around I guess.

Gav888

I was really tempted by the C2W scheme at my work until I read the small print, basically they own the bike for 3 years and you lease it off them, then you buy it at 5% market value after the 3 yrs, great, apart from I will probably change my bike after a year or 2, plus at the end of the 3 yrs I dont get first refusal, because its a big company, 1000+ staff at my location they will put it up for sale at 5% market value to anyone that wants it within my company, as its unfair to give me first refusal incase someone else might like to buy it!!!

So unless they tell me exactly when they are putting it up for sale, which they refused to comment, I could end up loosing it after paying for it over all that time..... which is shit, I want to own my bike outright which is what ive done, none of this paying for it for 3 years and I might not own it at the end shit.....

Sorry, rant over, but if you work for a good company then def go for it, the thought of spending £1000 on a bike and gear and getting it for near enough half price is very tempting....

doyler78

Sounds like a really silly organisation that you have there Gav888 not least because after 1 1/2 years (of the top of my head) the employee gets a whole slew of rights conferred on them for hire agreements - that's why you don't see cycle to work schemes longer the 1 1/2 years (or at least until now that is).

It really is the most ridiculous implementation of the scheme that I have yet heard of and I would not sign up to such a scheme either. Do they have any takers? 3 years is way too long in any case.

By stating that they will sell it for 5% they are actually breach of the rules surrounding the scheme. If they say typical value of 5% then they are ok because its not set in stone however if it is as blunt as you indicate then they really need to get their act together before they get hit with a huge tax bill

dessertwarrior

I only wish I could get involved in the scheme but for some reason, best known to the higher ups, it is not available.

Question for doyler78:

Clever but Its actually quite a poor system because:

1) higher rate tax payers get bigger savings than their basic rate counterparts

Why is this a bad thing? Surely regardless of what tax rate you are on, getting some back off the Tax Man is a good thing!

____________________________________________________________

doyler78

dessertwarrior wrote:

I only wish I could get involved in the scheme but for some reason, best known to the higher ups, it is not available.

Question for doyler78:

Clever but Its actually quite a poor system because:

1) higher rate tax payers get bigger savings than their basic rate counterparts

Why is this a bad thing? Surely regardless of what tax rate you are on, getting some back off the Tax Man is a good thing!

____________________________________________________________

So as long as the poorer members of our society get something back they should just be grateful. Nevermind the fact that those who earn more get higher returns. This is the taxation system we are talking about not a savings scheme where the more you put in the greater the return.

It flies in the face of a redistributive tax system and if this was any sort of widely used scheme this would be a national scandal. It flies in the face of the principles of the scheme itself which is to make the cost of ownership cheaper for all (yet the poorest can't even use the scheme at all) and those on basic rate get less back than someone earning £20,000 or more a year. That is a patent perversion of the scheme.

I'm a basic rate tax payer and I use the scheme because I take the view that something back is better than nothing however you have quoted me correctly in saying it is a poor scheme because of this, amongst other things, and I stand squarely over that and anyone that thinks this doesn't detract from the scheme is self absorbed.

Squaggles

I think it's a fine scheme although my previous employer didn't run it , the amusing thing about that is my previous employer was HMRC ( the inland revenue) !

MrChuck

Gav888 wrote:

great, apart from I will probably change my bike after a year or 2,.

It's not a scheme designed to keep keen bikers in shiny new kit though is it? Most of the restrictions look fair enough to me in the context of encouraging non-cyclists to give it a go when they might otherwise not.

rolf_f

doyler78 wrote:

There are whole series of reasons why I don't think £1K per year is really enough to get a person cycling for one full if riding through all four seasons. In all liklihood they probably wouldn't do that in their first year however there will be those that are put of by the costs of getting all the winter gear. Really £200 to buy all the accesories and clothing. Well £200 wouldn't buy me all that I require. That would just cover my lights and a pair of shorts. We can argue over the sums but it just doesn't wash with me and I suspect my argument doesn't wash with the majority here. That's life.

Where on earth do you buy your stuff and how are they still in business in the current climate!

For what it is worth, I am (after a 20 odd year gap) a biking novice and have just bought a bike on the scheme. Being sensible I blew the whole grand on an Orange P7 (which I'm not fit to ride!!). Since then, I have bought
1 Sprayway windstopper fleece (£60)
1 Endura waterproof (£60)
1 helmet £60)
1 unessential trip computer (£20)
Spare innertubes, puncture repair kits etc (£10)
Mini pump (£15)
Cateye light set (similar to what everyone else in town is using - don't need fancy lights for the town) (£15)

Still to buy
2xfloor pump (1 for work, 1 home) - guess = £40
Other clothes I use as found in wardrobe already eg old pair of RonHills etc. No fancy padded shorts yet but reviews here suggest adequate ones for £20.

Can't really think of much else. The above lot totals £300 and all quite decent quality stuff - could get much of that for less. That leaves £700 for the bike which is certainly plenty. I'd have thought a decent bike could be had for less than £500 which still gives you an extra £200 to buy some posh Hope lights if you must look cool. I'd say that any more than £1000 would be taking the pith - after all, this is funded by the taxpayer and plenty of people aren't using their bikes for commuting at all.

PS Just started this week and have done my third ride this week. Put 45 miles under the bike and I'm liking it!

doyler78

MrChuck wrote:

Gav888 wrote:

great, apart from I will probably change my bike after a year or 2,.

It's not a scheme designed to keep keen bikers in shiny new kit though is it? Most of the restrictions look fair enough to me in the context of encouraging non-cyclists to give it a go when they might otherwise not.

And you really believe that implementation of the scheme would encourage people to give cycling a go. You are locked into paying (hire payments) for 3 years with no reasonable expectation at the end that you will own the bike (even if they can't say that). From what Gav said it's basically pot luck as to whether he gets the bike or not. Somebody else could get the bike for say £50 that he made payments for 3 years on. Don't really see this as fair myself.

The only reason why most of us use cycle to work is because we are as certain as we can be that we will be given first refusal to own that bike and that the cost of buying it at the end will be pretty low.

I wouldn't be in my scheme if I was at all unsure that I would own the bike at the end.

gkerr4

i'm not sure about this and I think the risk is increased in the current climate.

It would only take a smart-arse accountant to realise that "fair market value" on, say a Planet X carbon bike after 12 months of the scheme is much much higher than the £5 or even £50 it is being offered out at (or even 10%) - lets face it - if you had a PX carbon build and then decided to sell it on ebay after a year you'd be looking for closer to £600 wouldn't you? - so whats to stop the company "auctioning" the bikes off to other employees in order to reach "fair market value" - after you had been paying a lease agreement on it for those 12 or 18 months!.

(the answer is 'nothing' by the way - they could easily do this)

Countering this is the attraction that, as an upper rate taxpayer - this is one of the few 'scheme's where I actually seem to win something and don't get further kicked in the teeth by the taxman.

socrates

So the way I look at it - no-one is forcing anybody to buy a bike on the scheme. If you think that you are being ripped off or don't like the scheme, don't use it. Go buy a £1000 bike for £1000. Typical British attitude you are getting something at 40% discount so what do you do - whinge about it. Either use the scheme or dont.

MrChuck

doyler78 wrote:

MrChuck wrote:

Gav888 wrote:

great, apart from I will probably change my bike after a year or 2,.

It's not a scheme designed to keep keen bikers in shiny new kit though is it? Most of the restrictions look fair enough to me in the context of encouraging non-cyclists to give it a go when they might otherwise not.

And you really believe that implementation of the scheme would encourage people to give cycling a go. You are locked into paying (hire payments) for 3 years with no reasonable expectation at the end that you will own the bike (even if they can't say that). From what Gav said it's basically pot luck as to whether he gets the bike or not. Somebody else could get the bike for say £50 that he made payments for 3 years on. Don't really see this as fair myself.

The only reason why most of us use cycle to work is because we are as certain as we can be that we will be given first refusal to own that bike and that the cost of buying it at the end will be pretty low.

I wouldn't be in my scheme if I was at all unsure that I would own the bike at the end.

I believe that it was designed to encourage people to start cycling, whether it's had the desired effect is something else and beyond anecdotes on here it's hard to say. And I think there's a very reasonable expectation that you'll end up with the bike, in fact I'd be surprised if anyone hasn't. I just can't see why any company would do anything other than take the easy option, which is just to hand it over for 5% or whatever it might be.

Anyway, the point I was trying to make was that a lot of criticism of the scheme seems to come from people who seem to be missing the point of it a bit.

[Tim]

If you are worried about fair market payments, over paying to get a better bike etc. why not do what I did and and be the person who set's up and administers the scheme?

I asked if we could do it, took on the job of running it and now have a cervelo which I'm paying off over 18 months. I imagine that I shall then sell it to myself for £25 at the end of the scheme and do it all again to get a nice mountain bike.

gkerr4

socrates wrote:

So the way I look at it - no-one is forcing anybody to buy a bike on the scheme. If you think that you are being ripped off or don't like the scheme, don't use it. Go buy a £1000 bike for £1000. Typical British attitude you are getting something at 40% discount so what do you do - whinge about it. Either use the scheme or dont.

You've misread the thread socrates - the whole point is that you may well be stitched up into NOT getting a 40% discount.

Lets take the case of a £1000 planetX - you get it on the scheme over 12 months - pay £600 over the year to 'lease' the bike (thats all you are doing) and are then expected to pay "fair market value" for the bike at the end of the process - now OK, some companies are charging nominal sums of £10 or £50 or whatever - but the scheme does state "fair market value"

now if you think that the FMV for a £1000 bike after 12 months is £50 then I will happily buy yours off you.

So.. - you could easily end up paying £600 in leasing and then a further £500 - £600 in "fair market value" - making your £1000 actually cost £1200

passout

The only people I know who have used the scheme are fairly keen cycists anyway. I've used the scheme to my advantage but I doubt if it will encourage many to cycle to work. Perhaps the government could give tax breaks to companies which further invest in cycling facilities - new showers, lockers, secure bike lock ups etc. I think it's the hassle factor that stops many people cycling to work - many companies are just not set up for it. Still, at least the government is trying something.

gkerr4

passout wrote:

Still, at least the government is trying something.

This is a very valid point - despite my whining - at least they are trying something..

homercles

oops, double post

homercles

gkerr4 wrote:

i'm not sure about this and I think the risk is increased in the current climate.

It would only take a smart-ars* accountant to realise that "fair market value" on, say a Planet X carbon bike after 12 months of the scheme is much much higher than the £5 or even £50 it is being offered out at (or even 10%) - lets face it - if you had a PX carbon build and then decided to sell it on ebay after a year you'd be looking for closer to £600 wouldn't you? - so whats to stop the company "auctioning" the bikes off to other employees in order to reach "fair market value" - after you had been paying a lease agreement on it for those 12 or 18 months!.

(the answer is 'nothing' by the way - they could easily do this)

Countering this is the attraction that, as an upper rate taxpayer - this is one of the few 'scheme's where I actually seem to win something and don't get further kicked in the teeth by the taxman.

This is all true enough, but I think as per the point made by someone else earlier on, most employers realise that this is a good/ nice way to engender loyalty and good feeling from employees, not stitch them up. If someone worked somewhere that they thought the latter was more likely to happen, well, I'd be reviewing that more closely than the finer points of the scheme!

amaferanga

alfablue wrote:

Below is the Evans document. 15% is as good as it gets unless the bike is in showroom condition, one in fair condition may get 6%. If you take the difference between the potential 15% value and the typical resale fee of 5%, that leaves a possible 10% benefit in kind, worth between £22 and £40 to the employee depending on tax rate and assuming a £1k original price. For a £500 bike and lower tax rate, we're talking about £11. To obliterate any such liability the employee merely needs to rack up loads of miles and go easy on the cleaning and maintenance. Realistically, the HMRC would probably spend more to collect these sums than they would gain, as each bike would need individual evaluation. I think the intent of the scheme is to turn a blind eye to these issues, and I would not be too paranoid about being shafted!

Category 1 - SHOWROOM CONDITION

ie just wheeled out of the showroom and never been used - this has already lost it's manufacturers warranties, as these only apply to the original owner plus it won't be of the spec that the buyer would have had the choice if still in the showroom. The document says "it has generally been the policy when pricing second hand bikes for sale to start at 50% of the original price for a showroom condition machine, descending from there to account for things like wear, demand and how long it has been since the bike was a current model."

Category 2 - EXCELLENT CONDITION

You have had the bike for the last year but only ridden it a couple of times.

The document says "15% of the original price is a likely outcome. Once could offer it up for more but reasonably expect to accept this kind of amount. If the bike is an absolute current model ie. same colour and specification as its unused shop floor equivalent, it could get a bit more, probably 17%"

Category 3 - GOOD CONDITION

A typical commuters bike that is one year old, been used regularly, has been excellently maintained and serviced and possibly parts exchanged, been cleaned and lubricated throughout useage.

The document says "commuter bikes are more likely to be left outside when they are not ridden, and users rarely have the same opportunities for after-ride care as the weekend mountain bike receives. A bike commuted on for a year in good condition can be expected to fetch around 10% of the original shop price. Using the same criteria described about, another 2% may be obtainable if the bike is still the current model"

Category 4 - FAIR CONDITION

Bikes that have received less attention than those described as good. These are unlikely to be clean, tyres may be worn and under-inflated, recalibration is required of the components, ends of the pedals are scuffed, but still recognisable as a recent acquisition after one year.

The document says "Historically, it has always been extremely difficult to sell such a bike..............we believe that it is near to impossible to put a price on these bikes, but recognise that sometimes it has to be done. 6% of the original would be likely to receive attention and possibly a sale"

Category 5 - POOR CONDITION

This is a bike that despite being only a year old, will demonstrate all the signs of being uncared for. The chain and moving parts will be coated in a thick, black muck that accumulates over a long period of time. Tyres will be worn and under-inflated, scrapes and scratches to the paintwork, rust in evidence.

The document says "this bike is effectively worth nothing at all, in that it will likely be impossible to find a buyer.........5% of the original price is a reasonable expectation with an additional 2% mentioned earlier if it is a contemporary model"

See above RE fair market value. Apparently it's not 'what you can get for it on ebay'. These schemes have been running for a while now and I haven't heard of anyone being shafted when the hire period came to an end. Its simply not in the interests of any company to do that. Its supposed to encourage cycling and should be seen as a way to motivate staff to get off their fat @rses. I'd be looking for alternative employment if my employer decided to shaft me at the end of the hire period by keeping the bike.

As others have said, if you don't like it just don't use it. Simple.

robthehungrymonkey

They're effectively making bikes cheaper, which whatever way you twist it will overall encourage people to cycle more. Which is a good thing.

Man, people can moan.... :roll:

People keep saying "you can get stitched up" etc. But Has anybody? really?

baser

I have just bought my 3rd bike on the halfords cycle to work scheme and its brill. We get a c.20% discount on the bike to start with as we C2W so many bikes (benifits of working for a large company) you then get the tax knocked off as well!! It has cost me less than £500 for a £1000 bike. I havn't paid fair market value for anything when it has come to the end of its lease, the HR team phone and ask if the bikes knackered, you say yes, and they decide its worthless and ask you to dispose of it responsably. Happy days!!

As I say 3rd time i've used the scheme and it couldn't be better, well maybe a 50% discount at the start??

Cheshley

A lot of posts here seem to be concerned about the transfer of ownership at the end of the payment period. My former employer stated that at the end of the scheme they would transfer ownership for one additional payment equal to what we had been paying, making 19 equal monthly payments and the bike belongs to me.

Surely any employer running this scheme will have made the decision as to how to deal with transfer of ownership before the scheme starts, so if in doubt, ask. All the figures will be presented before you enter into the agreement so if you're not happy with it, go to a shop and pay retail. Personally, I'm more than happy to have paid £576, interest free over 19 months, for a £900 bike.

Ker-CHING.

homercles

Cheshley wrote:

A lot of posts here seem to be concerned about the transfer of ownership at the end of the payment period. My former employer stated that at the end of the scheme they would transfer ownership for one additional payment equal to what we had been paying, making 19 equal monthly payments and the bike belongs to me.

Surely any employer running this scheme will have made the decision as to how to deal with transfer of ownership before the scheme starts, so if in doubt, ask. All the figures will be presented before you enter into the agreement so if you're not happy with it, go to a shop and pay retail. Personally, I'm more than happy to have paid £576, interest free over 19 months, for a £900 bike.

Ker-CHING.

I think what a lot of people are worried about is that, technically, the employer is not allowed to make this decision at the start of the scheme or else they potentially negate the tax benefit. In reality, most pretty much do (e.g. my lot actually print in the guidelines that you pay £10 at the end).

I'm sure the details of the scheme could be worded better but let's face it, it seems to have worked for the vast majority (if not all - as per hungrymonkey's post, has anyone heard of anyone really being screwed?)

andy_wrx

Another way of looking at these savings though is that you are getting a % off the full RRP of a bike.

Many schemes will lock you into Halfords or Evans or another retailer, so you'll have to buy a bike they'll sell you.

If it's a Carrera or Boardman you want, then will Halfords let you use your cycle-to-work voucher against their 'end of season super sale' price for that bike, or against full RRP for it ?

If it's not something they generally stock, there have been plenty of posts about Halfords being able to order-in anything you want (though I remember some about how you couldn't get a Planet-X from them, as someone was using that as an example above), but they'll charge you full RRP for it.

And you'll have to put-up with Halfords' (according to some posts) delays and mess-ups in getting the bike in, plus their (according to some posts) awful assembly and set-up of the bike and after-sales servicing of it.

Instead, if you can find yourself a bike at your LBS or on the web which is last-years-model or similar and is being sold at significantly less than RRP, that might actually be cheaper than buying a bike at full RRP through cycle-to-work and getting the tax&NI savings...