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C2W scheme?

rodgers73rodgers73 Posts: 2,626
edited August 2010 in Road beginners
I've had a look at the website for this and I'm still a bit puzzled. Can someone explain how I save money doing this??

Seems to me that I pay a monthly fee after getting the bike and have to buy it off my employer at market price after a year. How is that a help??

Can anyone tell me how this actually works to my advantage rather than, say, an interest fee purchase on a credit card?

Thanks

Tom
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Posts

  • random manrandom man Posts: 1,518
    Your employer pays for the bike and claims the VAT back, so you don't pay any VAT. You don't pay income tax on the amount borrowed either, so you save about 40% of the normal retail price.
    The market price you pay at the end is a nominal sum of about 5% of the cost. This is how I understand it to work. I applied for a loan about two months ago and still haven't got it yet so it can be a very slow process.
  • rodgers73rodgers73 Posts: 2,626
    Ah, I see.

    So what do you pay per month??

    Wonder if it will survive the cutbacks...
  • LucanLucan Posts: 338
    rodgers73 wrote:

    So what do you pay per month??

    If you take the maximum £1,000 you pay back £70.92 per month for 12 months (if you pay tax at the normal rate and you're not a supertax high earner).
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  • rodgers73rodgers73 Posts: 2,626
    OK, I'd expect to take about £300-400 at most
  • rodgers73rodgers73 Posts: 2,626
    OK, I'd expect to take about £300-400 at most
  • random manrandom man Posts: 1,518
    That should be less than £20pm. Mine was for about £750 and would have cost £35pm.
  • Paul32ukPaul32uk Posts: 80
    Lucan wrote:
    rodgers73 wrote:

    So what do you pay per month??

    If you take the maximum £1,000 you pay back £70.92 per month for 12 months (if you pay tax at the normal rate and you're not a supertax high earner).

    Take into account this is from your gross pay. Once you take into account NI and Tax savings you lose about £50 from your net salary per month.

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  • ilm_zero7ilm_zero7 Posts: 2,213
    do it - you wont regret it - I wish I could get another one this way!!!! even if (heaven forbid) you fall out of love with carbon fibre/or bikes you can always re-sell.
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  • pidismpidism Posts: 32
    I took out an agreement on this scheme last year. I think my contract expires September. This will be when I am due to pay my final installment/ Final purchase fee! The alleged 5% everyone talks about. :?

    I took out the agreement for a total of £950 to buy my bike over 12 months with a total of £68.84 taken from my monthly gross wage.
    12 x 68.84 = 826.08.

    Dont know exactly what the final payment will be as my employers only started the scheme last year. I was one of the first to take part.

    Either way I am happy with this. I do not have £1000 to go and spend on a bike, so easy tax free/ NI free payments from my wage are ok with me. :)

    I will repost when I make my final settlement.
  • furragfurrag Posts: 481
    What's the score on once you have the bike? Do you have to ride it to work? What happens if you don't, or you use buses on rainy days?

    Has anyone used the C2W scheme to purchase a superior bike which would be at high-risk of theft if locked in public, and instead commuted in on a cheap crappy bike?
  • rodgers73rodgers73 Posts: 2,626
    pidism wrote:
    I took out an agreement on this scheme last year. I think my contract expires September. This will be when I am due to pay my final installment/ Final purchase fee! The alleged 5% everyone talks about. :?

    I took out the agreement for a total of £950 to buy my bike over 12 months with a total of £68.84 taken from my monthly gross wage.
    12 x 68.84 = 826.08.

    Dont know exactly what the final payment will be as my employers only started the scheme last year. I was one of the first to take part.

    Either way I am happy with this. I do not have £1000 to go and spend on a bike, so easy tax free/ NI free payments from my wage are ok with me. :)

    I will repost when I make my final settlement.



    So if the final settlement is less than £124 you're ahead, but if not then it might not be much of a money saver compared to cheap credit card deals etc.
  • SpatulalaSpatulala Posts: 291
    Furrag wrote:
    What's the score on once you have the bike? Do you have to ride it to work? What happens if you don't, or you use buses on rainy days?

    Has anyone used the C2W scheme to purchase a superior bike which would be at high-risk of theft if locked in public, and instead commuted in on a cheap crappy bike?

    Yes they will place you under surveillance for the first couple of months. They recruited hundreds of ex Soviet spies to carry out the work when the scheme was first set up.

    Critically however, that is all lies. Do what you like with the bike. Across the 12 months I will have paid less than £600 for my £1k Trek 2.1. And because it comes straight out of my wages, it doesn't hurt a bit. I have ridden it to work about 10 times in the 5 months since I got it.
  • cooldadcooldad Posts: 32,599
    rodgers73 wrote:
    pidism wrote:
    I took out an agreement on this scheme last year. I think my contract expires September. This will be when I am due to pay my final installment/ Final purchase fee! The alleged 5% everyone talks about. :?

    I took out the agreement for a total of £950 to buy my bike over 12 months with a total of £68.84 taken from my monthly gross wage.
    12 x 68.84 = 826.08.

    Dont know exactly what the final payment will be as my employers only started the scheme last year. I was one of the first to take part.

    Either way I am happy with this. I do not have £1000 to go and spend on a bike, so easy tax free/ NI free payments from my wage are ok with me. :)

    I will repost when I make my final settlement.



    So if the final settlement is less than £124 you're ahead, but if not then it might not be much of a money saver compared to cheap credit card deals etc.

    No, as the money is taken out of your gross wage, you don't pay tax or NI on it so depending on your tax rate you will save another 30-45% plus the VAT.
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  • rodgers73rodgers73 Posts: 2,626
    Ah now I see the advantage.
  • I think C2W scheme is great and saves alot of money. I am currently doing the paper work for it, but I just found out that my company is not passing the VAT breaks to me!!!! WTF

    MM
  • ian_sian_s Posts: 183
    Has anyone encountered an employer actually charging a real 'fair market value' at the end of the term? Surely this would be more like 50% than 5% and rather change the picture..
    As far as I understand there is no guarantee as to what the final payment is until you get there?
  • galaxyboygalaxyboy Posts: 168
    I think C2W scheme is great and saves alot of money. I am currently doing the paper work for it, but I just found out that my company is not passing the VAT breaks to me!!!! WTF

    MM

    Same here, I have had 2 bikes on the scheme though. It works out you save your income tax rate and the company reclaims the vat.
  • jbrown1jbrown1 Posts: 4
    ian_s wrote:
    Has anyone encountered an employer actually charging a real 'fair market value' at the end of the term? Surely this would be more like 50% than 5% and rather change the picture..
    As far as I understand there is no guarantee as to what the final payment is until you get there?

    This is exactly the problem I'm having. I'm trying to get my employer to sign up to the scheme. They are ok on on everything, but the stumbling block is the 'market value' of the bike at the end of the term.

    Nowhere (on any offical site) does it state what this 'market value' should be. I keep hearing the figure of 5% on forums and such, but cant find anything to back this up.

    My employer seems to think that the market value will be what they sell for on eBay. If this is the case, the scheme would appear to be a total waste.

    For example...

    The original purchase price of a bike is £700.
    Payments before tax drop the purchase price to £291
    12 x monthly payments of around £24 means I repay the bike purchase price (before tax) of £291.

    The above is clear, and I don’t have a problem with.

    After the 12 month period the bike will be in excellent condition (as I always look after things). So a 1 year old same model bike in excellent condition will sell on eBay for at least £400 (bearing in mind the purchase price is £700).

    This would mean, I have paid £291 over the course of the year, and will have to make a final payment of £400 to take ownership of the bike (the alternative of just walking away with no bike after a year doesn’t appeal). Which in effect means I have paid £691 for a bike that had an original purchase price of £700.

    Doesnt sound like such a great deal... so where am I going wrong. Is there anything I can shove under my employers nose and say 'there look 5%, it says so'.
  • random manrandom man Posts: 1,518
    If the 'market value' is £400 and you've already paid £291 surely you'd pay the difference, ie £109?

    That's how I see it anyway.
  • jbrown1jbrown1 Posts: 4
    random man wrote:
    If the 'market value' is £400 and you've already paid £291 surely you'd pay the difference, ie £109?

    That's how I see it anyway.

    Thats a good point.

    But, according to the scheme you are only paying £291 over the year to hire the bike. If it counted toward the final cost it would be classed as a 'hire purchase' and wouldnt be tax deductible (or thats how I read it... but I'm stupid).
  • bendertherobotbendertherobot Posts: 11,684
    random man wrote:
    If the 'market value' is £400 and you've already paid £291 surely you'd pay the difference, ie £109?

    That's how I see it anyway.

    Nope, he hasn't paid to buy the bike, he's paid to hire it. And the purchase (not guaranteed in law) doesn't take that into account.

    It's a bloody nightmare. That said I have finally got my scheme provider to tell my employer to "settle" for 5% as they had just had a bike agreed by the HMRC at 5%. Mine is, however, TWO years old (I was on the scheme for 18 months then hired at zero for 6 months).

    Bear in mind I bought my bike for £1000 2 years ago before the credit crunch and currency fluctuations.

    If I was paying "market value" that bike would, IMO, be worth £800 or more now. (Carbon, ultegra etc).
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  • khwajakhwaja Posts: 2
    Has anyone actually signed up for a second bike on this scheme?
  • GarethBGarethB Posts: 11
    Isn't it the case that the bike is the property of the company until you have paid for it, so theoretically they can offer it for sale to other employess.

    In reality they've written off the cost as depreciation and bar you leaving the company then it's yours with no further payment.

    I was the first in my co. to use the scheme - £400 bike + £400 on gear .
    I didn't "get" the end payment either but when they said the bike would be depreciated I didn't argue.

    You can buy an inner tube with the cycle to work scheme, are they going to make you pay a percentage of the market value of that at the end of the year?
  • bendertherobotbendertherobot Posts: 11,684
    khwaja wrote:
    Has anyone actually signed up for a second bike on this scheme?

    Mine's just been processed. About to have the last one deducted from my salaray (£50) and the new agreement authorised.

    Chap I know is on his 3rd bike.
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  • alfabluealfablue Posts: 8,497
    khwaja wrote:
    Has anyone actually signed up for a second bike on this scheme?
    Yes, got a road bike (Planet X) and a tourer (Condor), in October I end the current agreement and can get a third.

    You can actually get two at the same time, say one for each end of a rail journey.
  • rjh299rjh299 Posts: 721
    I've got two bikes and just had my third processed for new wheels. Milk it for all it's worth
  • gwillisgwillis Posts: 998
    My employer capped it at £1100 so I went down the kit route and bought everything from a new carbon pump through to a fizik saddle and overshoes. I ended up spending aroung £700 but that did include some s works shoes as well. Still a barging at around £30 and aprt from new bibs im sorted.
  • magoo289magoo289 Posts: 223
    Regarding signing up for 2nd bike, in theory you can. The example HMRC uses is that if you ride your 1st bike to the train station, get the train and have a 2nd bike for the onward journey to work, this is allowed. So as previous said if your employer hasn't hired those soviet spies. You should be ok. Or get a 2nd bike once you pay off the 1st bike.
  • galaxyboygalaxyboy Posts: 168
    I have had 2 bikes, one after the other, but could have 2 at the same time as I have a 2nd job and they also offer the c2w scheme. You can also get 2 on one voucher.
  • khwajakhwaja Posts: 2
    Thanks for your replies everyone. I've just bought my first bike from my company at the end of the hire period. Looks like I could now get myself a second bike after all :D . I thought this was the case in theory but it helps to know that people have actually got a second bike in practice with no unwanted attention from HMRC! (not that you'd ever 'want' any attention from HMRC!)
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