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Cycle To Work initiative - No 12 month minimum period?

TonyPDHMTonyPDHM Posts: 2
edited August 2009 in Commuting chat
Hi all

I've been an on and off reader of several Bike Radar magazines over the last 15 years, and over the last few months I've been making good use of this site as a whole and especially this forum.

SO, it's about time I posted something, I guess :)

My problem is twofold - on the one hand, I'd like my girlfriend to be able to make use of the government's Cycle To Work initiative to buy a bike and some gear. Her employer, however, is concerned about the amount of paperwork and time involved in setting up a scheme for his small workforce of around 10 people (only 1 or 2 of which are likely to take part). He knows nothing of the initiative, he's just wary. Have any forum users set up scheme themselves as employers rather than employees? If so, please advise on the work it entails. I am particularly interested in people who've set up schemes independently of profit making companies like Halfords, Cycle Scheme, Evans etc. Although, any and all feedback is very, very welcome.

On the other hand, I'd like to be able to make use of the initiative myself. I'm currently employed by the council via an agency (who I'm sure have no intention of setting up a scheme), but I am soon to become 'permanently' employed by the council. I would like to spend as much as I like on a bike and gear, and I'd like to pay it off in 6 months or less as my contract with the council will be on a 6 monthly rolling basis. Unfortunately the council have already signed up to the Halfords scheme who have a upper limit of 1000 pounds and a minimum loan period of 12 months. This seems to be par for the course with most scheme providers, so I'm more interested in using the initiative without buying into one run buy a profit making company.

In my research so far I've come across the government's own DFT website information page. This states that there is no limit to the amount which can be spent on a bike and bike gear (if it's over 1000 pounds a Consumer Credit License is required by the employer, costing 725 pounds). More interestingly (for me) it states that there is no fixed period over which the loan can run. Have any forum users bought bikes in this way over periods shorter that 12 months?

The DFT website is:

http://www.dft.gov.uk/pgr/sustainable/cycling/cycletoworkschemeimplementat5732?page=1#a1003

The relevant passage is:

11) How long does a Cycle to Work scheme have to run for?

There is no fixed time period for which cycles and cyclists' safety equipment must be loaned under a Cycle to Work scheme. Similarly, there is no fixed time period for which a salary sacrifice scheme must run where one is used to offset the cost of loaning the cycle and cyclists' safety equipment.

If the salary sacrifice is ineffective (see chapter 6), tax and NICs will be payable on the pre-sacrifice salary. The loan period may be agreed at the outset between the employer and employee and the salary sacrifice agreed to run for the duration of the loan. At the end of the loan period the employer and employee may agree to revert to the pre-sacrifice salary.

If a salary sacrifice arrangement is to be in place for longer than 18 months an employee has the right to terminate that arrangement early at any point after the first 18 months has expired. Employers wishing to obtain an exemption from the statutory requirement that enables employees to take this course of action must apply to OFT for a derogation order.


Another question is, have any forum users bought one bike in this way, and then another bike after? Were any special arrangements required for this?

I seems as though the government have very kindly engineered a cunning tax dodge for us all. Understandably (due to the perceived pitfalls of tax/employment law) companies are offering branded and managed versions of the initiative which are in essence the same, but seem to be a lot less flexible, and possibly more expensive. I've always been one for buying 'no brand' paracetamol/aspirin/ibuprofen/codeine over massively overpriced Nurofen-type brands any day :D

This post is becoming a bit of a monster, maybe I should lay off the keyboard for a bit :)

Cheers all
Tony

Posts

  • STEFANOS4784STEFANOS4784 Posts: 4,109
    Bump, surely this monumentous effort deserves a reply :?

    Sorry i'd like to help but aint gotta clue :wink:
  • Eau RougeEau Rouge Posts: 1,118
    My work puts the C2W scheme in with a bunch of other salary sacrifice options (childcare, health care, insurance etc) letting employees pick and choose which benefits they want, but everything is always over 12 months, from the start of the tax year (April).
    I guess it makes it easier for them to run the whole salary sacrifice thing.
  • GrantyBoyGrantyBoy Posts: 166
    Eau Rouge wrote:
    My work puts the C2W scheme in with a bunch of other salary sacrifice options (childcare, health care, insurance etc) letting employees pick and choose which benefits they want, but everything is always over 12 months, from the start of the tax year (April).
    I guess it makes it easier for them to run the whole salary sacrifice thing.

    ditto
  • FyPunKFyPunK Posts: 160
    We are a two practice opticians, we have 13 members of staff on the books and a couple of us cycle to work, I put forward the cycle scheme to my boss and he just said look into it, so I did, it took me 10 mins to go through the legal bit and 5 mins online, a couple of emails and a visit to the shop to get a quote, it was really easy to set up unlike the nursery voucher scheme. If they wish I am more than happy to talk to them and explain, if this would help just pm me and I will send the phone number.
    www.justgiving.com/aidyneal Cycling Manchester to Blackpool. Look out for number 1691
  • Slow DowncpSlow Downcp Posts: 3,041
    If's fairly straight forward - I administer a scheme for the company I work for. We have a £3k upper limit (and a consumer credit licence), and a minimum period of 6 months. The problem with having a shorter period is that the "fair market value" becomes difficult to justify @ 5% (although we do 2.5%).

    The only paperwork you need is a A4 sheet hire agreement - and ensure that the payroll is set up correctly so that deductions are made gross and tax and NI relief is given.
    Carlsberg don't make cycle clothing, but if they did it would probably still not be as good as Assos
  • Christophe3967Christophe3967 Posts: 1,200
    If's fairly straight forward - I administer a scheme for the company I work for. We have a £3k upper limit (and a consumer credit licence), and a minimum period of 6 months. The problem with having a shorter period is that the "fair market value" becomes difficult to justify @ 5% (although we do 2.5%).

    The only paperwork you need is a A4 sheet hire agreement - and ensure that the payroll is set up correctly so that deductions are made gross and tax and NI relief is given.

    I have implemented a number of these schemes and they are indeed straightforward, if you're keeping within the £1,000 limit. Cycle Scheme is the best one IMO as you have access to a huge network of LBS so they'll be something convenient for staff. In London, this gets you access to Condor, Mosquito, Sigma and Pearson for example. They are very helpful, and keen cyclists to boot. An issue to watch out for is whether your employer is VAT registered. 12 months is standard and keeps things simple, but you can have longer or shorter repayment periods.
  • peterw47peterw47 Posts: 24
    Do the company run schemes charge any money?

    I've also been looking into this and it could well be that I'm the only going to do it so I don't see much point going through a scheme if it can be easily done independently... Of course I can see the benefit if it's a large company but otherwise isnt it just a case of buying the bike and setting up a hire agreement with salary sacrifice?

    Cheers
  • graeme_s-2graeme_s-2 Posts: 3,382
    I did mine over 12 months with cyclescheme, but there was an issue over my temporary contract at the time. My employer did offer to do it over 11 months if it would help, although his wasn't necessary for me in the end, so there should be a bit of wiggle room.
  • peterw47 wrote:
    Do the company run schemes charge any money?

    I don't think the schemes themselves make any charge to the employee, but I have heard that some bike retailers have an admin charge when someone buys through C2W. Ribble certainly do and I have heard of someone being charged by condor.
  • peterw47peterw47 Posts: 24
    So I assume if there is a charge then this is simply added on to the quote?
  • again, I assume that depends on the retailer. Ribble I think charge it seperately, they also allow you to top up the voucher, the info is on their website. Condor or others I'm not sure about.
  • peterw47 wrote:
    Do the company run schemes charge any money?

    I don't think the schemes themselves make any charge to the employee, but I have heard that some bike retailers have an admin charge when someone buys through C2W. Ribble certainly do and I have heard of someone being charged by condor.

    Cyclescheme charge the retailer 10% of the voucher price, so some shops pass that on direct to you as an 'admin charge' others pass it on by not offering a discount on the RRP etc.
  • AidanwAidanw Posts: 449
    Condor certainly charged me £50 to redeem my voucher with them (only telling me this pretty late on in the bike buying process) a year ago.
  • UKScoobyUKScooby Posts: 41
    Running your own scheme is a doddle.

    Your need to take the weekly / monthly hire costs from wages anyway to get the PAYE / NIC saving. That's easy.

    You also need to sort our a hire agreement which takes a little longer to get right. There are loads on the web - Evans etc plus many smaller retailers. Just bring theirs into MS Word and edit them to your circumstances. Mine took longer as we are weekly paid still - more to tailor.

    Issue one copy (leave it in the rest room) which states its 'pre-contractual' then fill in the proper copy and get it all signed up. Had a copy to the hirer.

    It started with me wanting a bike - thought we may get 5 or 6 in total - but so far we have done 14 bikes. Well worth the effort of tailoring the paperwork myself.

    And the second bit is what the scheme administrators effectively charge 10% to 'shuffle'. You have to fill your own form in anyway. If you do your own paperwork in house the local shop will give you that 10% off the price as discount.

    How much you plan to spend (are allowed to spend) affects how worthwhile the effort is. If you spend the maximum £1,000 - you can actually get £1.100 of kit (or more if you pay the extra from your own pocket.

    Over 14 bikes we saved about £1,500 as discount - then over £1,000 on VAT and £2,000 on PAYE / NIC. And as most of the admin was done in my own time the boss saved about £1,000 - better remind him at bonus time !

    The other beauty of self administered is that as a small employer you will also be able to buy from anywhere, including from another small employer - your local shop - rather than a large national.
  • UKScooby wrote:
    Running your own scheme is a doddle.

    Your need to take the weekly / monthly hire costs from wages anyway to get the PAYE / NIC saving. That's easy.

    You also need to sort our a hire agreement which takes a little longer to get right. There are loads on the web - Evans etc plus many smaller retailers. Just bring theirs into MS Word and edit them to your circumstances. Mine took longer as we are weekly paid still - more to tailor.

    Issue one copy (leave it in the rest room) which states its 'pre-contractual' then fill in the proper copy and get it all signed up. Had a copy to the hirer.

    It started with me wanting a bike - thought we may get 5 or 6 in total - but so far we have done 14 bikes. Well worth the effort of tailoring the paperwork myself.

    And the second bit is what the scheme administrators effectively charge 10% to 'shuffle'. You have to fill your own form in anyway. If you do your own paperwork in house the local shop will give you that 10% off the price as discount.

    How much you plan to spend (are allowed to spend) affects how worthwhile the effort is. If you spend the maximum £1,000 - you can actually get £1.100 of kit (or more if you pay the extra from your own pocket.

    Over 14 bikes we saved about £1,500 as discount - then over £1,000 on VAT and £2,000 on PAYE / NIC. And as most of the admin was done in my own time the boss saved about £1,000 - better remind him at bonus time !

    The other beauty of self administered is that as a small employer you will also be able to buy from anywhere, including from another small employer - your local shop - rather than a large national.

    Hi scoobs,
    Finally someone has managed to come up with the answers i've been looking for ;), however, is it not going to be possible to purchase a bike for, say £1750 if you administer cycle to work yourself and use your company's credit licence which is already in place?

    I have spoken to my LBS and they are more than happy to refund the 10% that they would have used to pay the 'middle man' on my purchase.

    Is there any chance you could pop a link down or e-mail me the puchase agreement you mentioned?

    Cheers
  • UKScoobyUKScooby Posts: 41
    Hi

    You can spend over the £1,000 - but the extra must be paid out of your own pocket. I spent £1,024 so paid the £24 back with my first weeks hire - without the tax saving etc of course. For £750 extra I suggest you pay it direct to the shop at the time of purchase. That is unless there is a separate credit licence in place which allows you to go beyond the £1,000 limit under the Gov't scheme.

    A couple of places to look for paperwork are
    http://www.evanscycles.com/ride2work/download-forms
    http://www.richardsonscyclesscarborough ... forms.html

    I guess my paperwork was about two thirds from Debbie but beefed up a third by 'bull' from the Evans site - emphasising Health and Safety, Insurance etc etc (covering my back side with the lads in the factory). Evans paperwork just didn't seem to suit our circumstance quite as well - being self administered and weekly.

    There will be others if you look around.

    All I need to sort is the final buy back - for 45 weeks time ! You often see 5% mentioned - but I hear our council and the NHS do 3%. If 3% is good enough for the civil service its good enough for us.
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