How does the Cyclescheme work, financially?. Because.....

RSV_Ecosse

.....my employers have recently circulated an email saying that if you have purchased a bike last year then this year when the hire term finishes you will be barred from purchasing anything else on the Cyclescheme for a 2 year period.

Reason being is my employers say that they have to stand the purchase price of the bike from within their budget and then claim it back through the Cyclescheme afterwards. Because of budget restrictions anyone who got a bike last year will have to wait for 2 years now till they can buy another via the scheme. They also said that they under estimated the amount of employees who took part in the scheme last year and bought bikes ( surely that's a good thing?. Encouraging your workforce to keep fit and healthy = less sickness and injury = more productivity/higher performing employees? ) , not to mention the carbon footprint reduction if more employees are cycling to work instead of taking the car.

Is this how the scheme works, financially?. Or are my mob trying to pull a fast one?.

I got my bike last summer and the road cycling bug bit me deep. I'm now hooked and was looking to sell on my current bike once it was paid for this year and upgrade to a higher spec model. Now it looks like I'm screwed for doing that for 2 years. Bugger!!!.

Anonymous

If it bankrupts the company then I think that I would rather keep my job than buy another bike! Sounds fair to me, a bike should last more than 2 or 3 years...

RSV_Ecosse

Local authority rather than private company ( not that it makes any difference 8) ).

I know, seems sort of fair especially in order to encourage new sign ups to the scheme, makes sense. Just annoying as this 2 year barred thing only started this year. Last year there was a fair old amount of us ( most yet ) who signed up for it and a lot of us, myself included went for the max £1k value bikes.

Still, suppose it gives me time to save up for that Bianchi Infinito now.

alfablue

How it works, company pays cyclescheme the cost of the voucher up front, company gets the money back over the hire period by virtue of employees salary sacrifice, so the employers do take an initial hit, but they can also make money out of it because of the 12.5% employers NI contribution on the value of the voucher that they save.

It seems fair, but sad, at least they aren't closing the scheme.

top_bhoy

It seems to be a flaw in the system that it is the employer who has to 'buy' the bike and then claim the cost back. In Oz, until about 13 months ago, if your employer participated, you could buy a laptop (from any source) and then submit the receipt to payroll who would adjust your salary accordingly with the appropriate Govt tax relief applied.

Once it had been set-up, it appeared to me to be a fairly simple scheme to administer with minimal running costs. The employer had no authority on the use of the laptop but the scheme was cancelled to cut Govt costs. One laptop a year was allowed to be purchased this way and it seems to me that the UK Cyclescheme could be administered in a similar way and this would allow people the freedom to buy and support their LBS.

alfablue

It seems from what you describe, that the Oz system requires the employee to have laptop cash available to them initially, this would exclude the low paid/hard up, which would not really be fair, and would result in a much lower uptake, I'm sure.

top_bhoy

alfablue wrote:

It seems from what you describe, that the Oz system requires the employee to have laptop cash available to them initially, this would exclude the low paid/hard up, which would not really be fair, and would result in a much lower uptake, I'm sure.

It did, which I agree is a negative....but you got the full amount back in the next payroll....when the monthly salary adjustment kicked in. If you timed the purchase right, you could be out of pocket for a few days. Who knows if the uptake would be lower - less bureacracy and a wider choice of models to select from, could actually make it increase.

Maybe an employer could have a hardship fund to allow employees short-term loans payable to assist with bike purchases and to be deducted automatically at the next salary.

alfablue

I agree it could be simpler, but anything that doscriminates against the low paid (who may have absolutely no availability of a lump sum or credit) would be a deal breaker to me. The low paid are surely those that cold most benefit, the cost savings on commuting would be a major benefit to them, rather than just a bonus for the better off cyclist pursuing their hobby, whilst being fully able to drive to work every day and keep the bike for leisure.

kingrollo

There is a school of thought - by the tories - to zero vat bikes, scrap cyclescheme - cuts the admin, ok the savings aren't great - but the current scheme favours higher rate taxpayers anyway .....

silvermetalfox

At least your company takes part RSV. I'm an accountant in finance dept of my company and whilst we all agree that it is an okay scheme for both employee and employer, our HR dept decided that it would cause them too much admin to run the scheme. So we miss out.

Sucks big time as a quick survey I did found a lot of people would take part and as we are (pretending to be) a green company and reduce our carbon footprint etc etc I was a bit miffed. Sadly HR rules supreme in some cases.

bompington

We had to work a bit to persuade my company (small specialist school) to do it - the admin guy, who was going to have to do the actual paperwork, was all in favour, but the boss kept on seeing imaginary problems, funnily enough I think this was mainly due to previous experience of a council scheme.
To answer the OP's question, the company can do pretty much what it wants, they don't have to make it available to anyone if they don't want to. It sounds like they're just concerned about cashflow, nothing much new there.
Incidentally, as well as the employer's NI, they get a bit extra from the "final purchase" payment, so even if you consider the capital cost of paying up front, the company should be well ahead by the end.

Surf-Matt

I spent ages persuading my company to Cyclescheme it. I sat in an office with myself and my wife (who run the company) and eventually we agreed with ourselves that it was a good idea...

Didn't bother with it this year - they take a 10% cut of the RRP. So bought it direct (using the company) and got 10% off. I trust myself not to nick it