Cyclescheme Final Payment

SDK2007

sheepsteeth wrote:

so did anyone make a decent saving with cycle scheme?

I got a £1000 bike in Nov 2006 for about £580 on the scheme.
- No setup cost
- No final purchase price

I'm about to buy another £1k bike and expect to make a fair saving.
The trick now is to defer ownership for 4 years so the final purchase price is 7% (on bikes that cost more than £500)

sikite

sheepsteeth wrote:

so did anyone make a decent saving with cycle scheme?

My first purchase using the cycle scheme – started May 08. Employer was VAT registered.
Gross Deduction; 12x £58.81 = £705.72 (bike was £500 the rest was pedals and gear).
Net Salary Deduction; 12x £33.22
Set up Fee = £0.00
Purchase Fee = £33.22 (1 extra month’s salary sacrifice) in the 13th month.
Total Cost = £431.86
Saving = £273.86 or 39%
Good saving!!

My current actual example is: (Different employer – not VAT registered)
Gross Deduction; 12x £83.33 = £1000
Net Salary Sacrifice; 12x £59.10 = £709.20
Set up Fee = £0.00
Purchase Fee now = £250.00
Total Cost = £959.20
Saving = £40.80 or 4.08%. Brilliant saving!!! NOT.

Will never use the scheme again whilst being a basic rate tax payer in an organisation that isn’t VAT registered.

I’ll be deferring ownership for the extra 30 months. That’ll make it 42 months old when I have to buy it finally. I’m not sure what evaluation they’ll use at that time; it could be 12% or 7% or somewhere in-between - exactly 9.5% is half way. That’ll mean the purchase price will be £95 + £70 deferral fee = £165. So better than £250 they want now. If it works out like that then I will save a grand total of £125.80 or 12%. Probably still not worth doing it. Best to shop around and get it on zero interest credit card for 12 months if you can!

Cyclescheme needs to make this explicit; not to found out by unwitting cyclists 12 months down the line. Grrrr!!

fletch8928

I think i made a saving.

£1399 bike, haggled down to £1175. 12 payments of £49 = £588 + £5 final payment + £175 to top up the £1000 voucher, let me see what I paid.

£588 + £5 + £175 = £768

Total saving on RRP of £631 (I know) or 45.1%.(I think).

I was lucky with the haggling. Before i mentioned Cyclesheme it was going to be £1125, we agreed to split the £100/10% cyclesheme take off the shop for their greed/admin.

Daz555

sheepsteeth wrote:

so did anyone make a decent saving with cycle scheme?

I bought my FSRxc on C2W in 2009 and my total payment was £640. Best price online at the time was about 950 notes.

El Capitano

sheepsteeth wrote:

so did anyone make a decent saving with cycle scheme?

Yes. Got the TT bike for £270 less.

sikite

sheepsteeth wrote:

so did anyone make a decent saving with cycle scheme?

My Personnel section have responded to my concerns with the following
"The government changed the rules on how the cycle to work scheme work in August this year and made it apply to loans that had already been started. Cyclescheme have put a lot of effort into ensuring that this does not make the scheme unattractive. If you are sold the bike now, under the new rules you will have to pay a ‘fair market value’ which is obviously still significant. They have therefore come up with this extended hire period." Have a look at the following.
http://emails.cyclescheme.co.uk/files/m ... eefaqs.pdf
The key paragraph within this document says "What will happen at the end of the 31-month hire period? Cyclescheme will contact you to discuss your options. At this point ownership of the bike may be offered to you for a ‘consideration’ in the form of a market value Fee that is equal to the ‘Continuation Deposit’ you have already paid.
So a revised saving calculation for me if the above turns out to be true is...
Gross Deduction; 12x £83.33 = £1000
Net Salary Sacrifice; 12x£59.10 = £709.20
Set up Fee = £0.00
Continuation deposit = £70.00 (7% of initial loan)
Total Cost = £779.20
Saving using scheme = £220.80 or 22% at 4 years old.

Much better than my previous estimate of 4%. But Cyclescheme will own my bike so no chance of selling it.

It appears that Cyclesheme are doing their best to implement Government rules. So The Government deserves the "Grrrr".

FatChap

Well when I signed up with Cyclescheme their web calculator told me I would make a 40% saving. I always knew I would have to pay a final payment and was told by my company's HR department that it would be 5%. 12 months later they wanted another 5% and the remainder of the bike's price. I challenged this and they said I would only need to pay the 5%. Then a week later I got an email from Cyclescheme asking for a final payment, extended hire, or bike return. HR eventually said I owed them no more but the final payment to Cyclescheme was considerably more than 5%. In the event I will make a saving of only 15%, considerably less than expected and that doesn't include insurance which I would not have paid normally (rural area, mainly cycle to work in isolated area).

Not terribly happy with this. Cyclescheme advertising states an average saving of between 40% and 50%. I'm pretty typical so this is misleading.

Also, nobody seems to understand how the system works and it essentially expects you to sign up to a deal where you cannot know how much you will have to pay. I was the first at my company to reach the final payment stage so I suppose I am the guinea pig, but even so!

Shotsaway

FatChap wrote:

Not terribly happy with this. Cyclescheme advertising states an average saving of between 40% and 50%. I'm pretty typical so this is misleading.

Also, nobody seems to understand how the system works and it essentially expects you to sign up to a deal where you cannot know how much you will have to pay.

I am not a fan of Cycle Scheme or Cycle 2 Work (Only because they appear to be the only winners in the scheme), but I really do believe that their advertising is totally misleading and could possible be considered as illegal.

They advertise big savings but the fact is they should not be advertising savings at all! The scheme is a HIRE scheme not a PURCHASE scheme and there cannot be an automatic entitlement to purchase the bikes at the end (By giving you a purchase price at the start of the hire period, they are also making the scheme a purchase scheme and therefore you wouldn't make any TAX or NI savings). As the scheme is a hire scheme and as they cannot mention purchase amounts/entitlement, how can they advertise savings? Surely there has to be an automatic purchase entitlement to be able to mention savings. After all if I hire a bike for a year, at no point have I made a saving because I don't own the bike. All I have done is make hire payments.

The biggest problem with the scheme is that everybody (Us, LBS's, big retailers) all talk about purchase and promote savings, when infact all they should be talking about is hire or rental! Although the reason that hire or rental isn't discussed/mentioned is because the take up would drop. They are counting on the fact that people don't really understand the scheme, so that the bike shops sell bikes and so that the cycle scheme companies get their commissions from the bike shops.

cycleschemie

Shotsaway- that's bang on.

I'm going to fall foul of the 'enhanced' final payment myself, but I was well aware that it was essentially an HP scheme and not a discounted-bikes scheme, as many seem to think.

You're right in that CS and C2W do advertise more heavily the notion that you are getting a discount; however, the small print is not so small, clear, and impossible to miss.

We can't really blame the companies involved for promoting it this way, though- that's called advertising.

BoardinBob

Just got my flex benefits for next year and they've amended the wording for the C2W

If you want to buy the bike it's based on the HMRC matrix

If you don't buy it they'll charge us for an extra month as a fee :roll:

Sixtoes

Following the Governments new guidelines on the final payment my employer has decided it won't be continuing with Cyclescheme.

I got my Trance X4 at the end of July. If I'd known that I was going to be faced with a final payment of £250 on top of my monthly payments I wouldn't have bought it and would probably have spent a little bit more at the end of the summer. Mug!

The whole thing sucks frankly. I wouldn't mind so much if Cyclescheme/my employer took responsibility for servicing and maintenance during the hire period, but taking my monthly payment, making me responsible for maintaining it and then charging me £250 quid at the end really winds me up.

Big dave 3

I have just found this thread. I am in a similar position. I took out a £1000 voucher & was told after 12 months it would be a 5% voucher value payment so £50 to keep the bike.

Now ive been written to by HR saying it will actually now be £250 to keep the bike even though ive got it in writing it will be £50. I dont know how they can do this.

Obviously I wouldnt have bothered doing the scheme if I had known.

Is there anything that can be done about this? I think it would be silly to hand the bike back as its still in good condition & I would have paid £600 to rent the bike out for a year which ive hardly used. Is this down to WOrk HR or Inland Revenue or Halfords? :evil:

Gailsman

Just found this site through searching the web for info on the Cyclescheme.

My wife has just paid her last payment of £83.33 for her £1000 electric bike. She's now had a letter from Cyclescheme asking for a £250 transfer fee. She was shocked, as many others on here have been. The guy who sold her the bike said that she might have to pay a one off £50 admin fee, but she would be saving about £300 through reductions on her tax and NI payments.

So it seems that she is having to pay more for the bike than she would if she had paid for it upfront using an interest free credit card. If she had known what a rip off it was going to be, she wouldn't have bothered.

She could of course pay the £70 extended rental fee. But how much would she have to pay after the 30 months? Or of course she could give the bike back. So it would have cost her £1000 to travel to work and back for a year. It would have been cheaper for her to pay for a car parking space at the hospital where she works and travel in comfort.

TommyEss

Big dave 3 wrote:

I have just found this thread. I am in a similar position. I took out a £1000 voucher & was told after 12 months it would be a 5% voucher value payment so £50 to keep the bike.

Now ive been written to by HR saying it will actually now be £250 to keep the bike even though ive got it in writing it will be £50. I dont know how they can do this.

Obviously I wouldnt have bothered doing the scheme if I had known.

Is there anything that can be done about this? I think it would be silly to hand the bike back as its still in good condition & I would have paid £600 to rent the bike out for a year which ive hardly used. Is this down to WOrk HR or Inland Revenue or Halfords? :evil:

Sadly, you don't actually have anything in writing - certainly no guarantee of a final asking price. The whole "get out of jail free" card as far as Cyclescheme is concerned, is that for tax purposes, they aren't allowed to quote a final price, merely give an indication. The small print then allows them to charge what they like - you can then choose whether to pay that or give the bike back.

Whilst Cyclescheme are undoubtedly taking the wee wee and hardly acting within the spirit of the scheme, they are, sadly, acting within the rules of the scheme.

To that end, I doubt there is much you can do.

Shotsaway

Gailsman wrote:

My wife has just paid her last payment of £83.33 for her £1000 electric bike.

£83.33 is the gross salary deduction. The true cost for a standard rate tax payer would have been £57.50 per month, which would have been the net deduction because of the NI and tax savings. Your wife's total cost will be £57.50 x 12 + £250 purchase fee = £940. If your wife is a high rate tax payer the saving will be more.

Gailsman wrote:

It would have been cheaper for her to pay for a car parking space at the hospital where she works and travel in comfort.

As the NHS isn't VAT registered, there was no point in joining the scheme, as they can't claim the VAT back and then pass that saving onto you.

If the employer had of been VAT registered this would have reduced the net monthly payment from £57.50 to £48.94.

mattv

It is not a rule change, it is a clarification of the rules, so it is retrospective. Taking the p though, as it is no saving for most people now. Unless you need the 12 month interest free credit facility of course, which some people might. I work in an LBS and since this clarification we have gone from 4 or 5 vouchers a week to 2 vouchers in 2 months. Not good for the trade!