Cycle to work scheme - Is it really worth it?

yackers1

Now looking at buying a bike through the CTW scheme and am confused about whether it is really worth it or not.

I understand how it all works etc, and that at the end of the term I have to buy the bike off my employer at market value plus VAT (providing he sells it to me that is). My question is over the market value at the end of the term. Some website I was looking at quoted a figure of 25% if the bike cost more than £500.

After considering the loan repayments and having to buy the bike at the 25% plus VAT the savings seem miniscule.

So, has anyone gone through the whole scheme and bought the bike at then end? How much of a saving did you make? Is it really worth it or if oyu had your time again would you just go out and buy the bike yourself?

Thanks for your help with this!!

navrig

Have a search:

http://www.bikeradar.com/forums/viewtop ... highlight=

paulbox

I think your calculations are correct, when I did mine (£1k) voucher, all the talk was of a final payment of £50 - £75, this made it worth it to me. However now that the IR has issued the 25% above £500 guideline it just doesn't seem worthwile to me.

I've not received details of what I have to pay but am expecting the worst...

springtide9

The final payment guidelines are now documented, and I believe they implemented pretty strictly (you have to prove the bike is worth less I believe)

But, some companies allow people to continue to ride the bike 'free of charge' for a number of years - basically until the value of the bike is 'negligible' (so avoiding the final payment)

trevtherev

I do have a bike on the BTW scheme the only downside is that after paying all that money thourghout the year you do not actually own the bike!! I would not do again and my next bike will be bought at the end of season sales.

wadpr

I think it is pretty good. I bought my bike about an year ago. So no more salary sacrifices. Recently they asked me to pay around £45 which is the rent for the next 3years and there will be no more payments. At the end of 3years the value of the bike will be negligible.
It was great for me as I am in the 40%tax bracket!

scazzer

Ive just recently taken a bike out on the Cyclescheme,and also wondered if it was worth it with the final 'FMV' being set at 25%.
But its my 1st road bike and i dont plan on selling it for a few yrs so as i see it i can pay around 7% of the original ticket price so the cyclescheme will own the bike still for 3 yrs,explained better here http://www.guardian.co.uk/money/2010/nov/13/cycle-to-work-bike-tax-benefit

I got bike £600,my actual payments per month after all deductions is £30x12=£360
then 7% payment which i get about £42(i think) ,not bad saving...

MrChuck

It can still be useful though if paying in installments is going to make a difference to you.

When my bike got nicked I didn't really have the cash in my pocket to buy what I wanted outright, and since Evans don't sell Cotics Cyclescheme let me get one without having to lay it all out at once.

If there's a saving of any sort at the end it's icing on the cake, but if Evans had had what I wanted on finance I might well have just done that instead.

lochindaal

my company has just signed up. 18 or 20% value after 12 months. If you want you can pay 3% and then pay nothing after a further 3 years.

Paul32uk

I think it depends on who you use for your scheme and the options they have taken with regards to final payment as to whether the scheme is still viable to you.

Our company uses cyclescheme.co.uk and we are letting them deal with the sale of the bike. This way at the end of the first year cyclescheme will contact an employee and offer them the chance to extend the hire period for three years for a small deposit of either 3% or 7% depending on the bikes initial price. At the end of the three years said deposit is offset against final payment and the bike is yours. So once that deposit is paid you will have to pay no more. The outcome is if you buy a bike over £500 you will pay 1% more than when it was a 5% nominal payment at the end or save more if you buy a bike sub £500.

It's still a no brainer to me and I'll be using the scheme again as the savings are still there. All those people that are worried that the bike isnt actually theirs, how many people on the scheme do you know that have had someone come round and asked to take the bike back?

Of course I appreciate that there are schemes that dont work in the manner above so may not be worth signing up to.

markmod

It seems to me this scheme has now joined the ranks of many other schemes... Whereby users of it in the past have enjoyed a higher margin of savings due to the very low final payment, HRMC have got wise to this practice, and have now instisted a much higher final payment, to which another 'ahem, cough' 'loophole' or oversight or whatever you wish to call it now being used, namely the deferred ending of the payment scheme.

I have used the scheme in the past and it worked well, but feel that the government and HRMC consider it to be a bit of a hot potato now, if they could they would scrap it i'm sure, but that would look bad as it would be against the (ahem again) pro bike, healthy living, low carbon policy (lol) they use for having the fluff out of our pockets on the extortionate fuel duty escalator.

In my book, wherever you find a scheme, there's always a 'schemer'!!

bruce225

Mine from work is a six year rental plan with no/little purchase value at the end...

Planning on getting a new bike every year,selling my previous one.

The number of people selling Boardman bikes on ebay including un ridden ones tell me this is what a lot of people are doing so there must be savings in there....

markmod

I hope you are waiting for six years before selling your first bike etc as the bikes aren't yours to sell for six years. They are only 'rented' by you.

navrig

BRUCE225 wrote:

Mine from work is a six year rental plan with no/little purchase value at the end...

Planning on getting a new bike every year,selling my previous one.

The number of people selling Boardman bikes on ebay including un ridden ones tell me this is what a lot of people are doing so there must be savings in there....

I would suggest that this is risky and that you may well be asked to produce the bikes that you have sold but were not entitled to sell.

Probably get away with a couple but not six new bikes year on year.

markmod

I think Bruce255 maybe pulling our chain....

bruce225

No been serious,

Who's going to check up if you've got the bikes
O.K Probably won't sell one every year,but what's to say it hasn't been stolen or crashed beyond repair..I know your supposed to have insurance but that's just to protect you so your not paying for something you no longer own,

My boss doesn't care,he sees it a a little perk for all my hard work.

But people on the C2W scheme are getting kids bikes for the young ones and bikes for the mrs...

Won't that look odd when your producing Little Miss Princess bike with 10" wheels but your 6.2"..

ShutUpLegs

As others have said, its a good way of buying a new bike without the missus moaning/ finding out about you spending money

Paul32uk

The thing is Bruce the people getting these bikes are doing the deal with whichever cycle shop it is that they are dealing with. They will have applied for one bike through the scheme and it would be this bike that would have to be produced if asked for.

I also do not know whether when you are hiring a bike through your company that you are legally allowed to get another bike on the scheme until the hire period is up. The guidelines suggest you would be allowed two bikes if you were to cycle to a train station and then need a bike at the other end but I'm not sure how it works now with these extended hire periods. I would assume that it be the case you cant get another bike on the scheme until the end of the hire period. You potentially could end up costing your company a lot of hassle and money if they dont fully know the rules on this.

SDK2007

The Cyclescheme market value for bikes costing £500+ starts at 25% after 1 year but drops to 7% after 4 years.
So, keep the bike for longer and the final payment will be less

navrig

Paul32uk wrote:

The thing is Bruce the people getting these bikes are doing the deal with whichever cycle shop it is that they are dealing with. They will have applied for one bike through the scheme and it would be this bike that would have to be produced if asked for.

I also do not know whether when you are hiring a bike through your company that you are legally allowed to get another bike on the scheme until the hire period is up. The guidelines suggest you would be allowed two bikes if you were to cycle to a train station and then need a bike at the other end but I'm not sure how it works now with these extended hire periods. I would assume that it be the case you cant get another bike on the scheme until the end of the hire period. You potentially could end up costing your company a lot of hassle and money if they dont fully know the rules on this.

The question asked in our firm about buying a second bike just as the payments finished of the previous bike. The company was told by HMRC that the scheme had to be on offer to everyone for it to be legible.

bruce225

When i talked to the lady in our HR she told me i could have one next year...i.e get a road bike this year for the nice weather, next year get a MTB bike for winter riding..I was presuming i could get one year after year.

O.K maybe after year two or three i might have to claim for my voucher to be used to update components on bikes,if i'm renting it off them for six years they should pay for replacement components...

I guess it all goes down to the type of company you work for...What your allowed and not allowed and how to police it...And seeing i got the voucher last year and no one at work as yet to see my new bike guess mine are lenient.

markmod

BRUCE225 wrote:

My boss doesn't care,he sees it a a little perk for all my hard work.

But people on the C2W scheme are getting kids bikes for the young ones and bikes for the mrs...

Won't that look odd when your producing Little Miss Princess bike with 10" wheels but your 6.2"..

And it is for this very reason that HRMC is now coming down hard on the scheme. Exactly the same happened to the 'buying a computer through work' scheme when people started to buy xbox 360s and playstation 3s....

From my dealing with HRMC, if it looks like your are taking the p!55 they can make it very financially difficult for the tax abuser. I just hope your company is completely clued up about the in and outs of the scheme Bruce, it would be a real shame if after four years and lots of bikes (either sold on by you or not) your company is visited for an inspection by the tax man/lady, it could be an expensive mistake on behalf of the company for you! I think they can ask to see the bike/s at any point within the period of tax offset (rental period in your words)

The rules are very much tighter this year. Just watch yourself mate.

Abuse it and lose it!

dirkdiggler69

i bought my new bike with my own money.
as per usual i enjoy having absolutely no help from anyone especially the bloodsuckers at hmrc.
in fact if i'am killed or die unexpectedly i have given my wife strict instructions to bury me naked 18ins deep face down so they can still kiss my ar*e when i'm gone :shock:

bruce225

markmod wrote:

BRUCE225 wrote:

From my dealing with HRMC, if it looks like your are taking the p!55 they can make it very financially difficult for the tax abuser. I just hope your company is completely clued up about the in and outs of the scheme Bruce, it would be a real shame if after four years and lots of bikes (either sold on by you or not) your company is visited for an inspection by the tax man/lady, it could be an expensive mistake on behalf of the company for you! I think they can ask to see the bike/s at any point within the period of tax offset (rental period in your words)

The rules are very much tighter this year. Just watch yourself mate.

Abuse it and lose it!

O.K you've scared me, maybe just the 2 bikes...

Still wonder how they police this thing..As anyone ever had to answer to HRMC.. Didn't they drop it to the £1000, thought that was introduced to kick out the cheats..

Paul32uk

BRUCE225 wrote:

I guess it all goes down to the type of company you work for...What your allowed and not allowed and how to police it...And seeing i got the voucher last year and no one at work as yet to see my new bike guess mine are lenient.

No it comes down to HMRC's rules. All companies HAVE to follow the same rules. As said I'm not sure what HMRC rules are on someone getting another bike on the scheme whilst still hiring the initial bike. As HR are happy to let you go ahead and get a second bike then go for it, I just hope it isn't based on you telling them that you are allowed a new bike each year.

markmod

Hey right on dirk... And if the Hrmc aren't bothered to pucker up, at least you will provide a great bike stand for a fellow cyclist! Lol

pdw

Still wonder how they police this thing..As anyone ever had to answer to HRMC.. Didn't they drop it to the £1000, thought that was introduced to kick out the cheats..

No, the £1k limit is nothing to do with HMRC. It's a result of the "hire" needing a credit licence, and the Office of Fair Trading have issued a free licence to all companies for bikes up to £1k.

They police it the same way as everything else: you declare the numbers to HMRC and ensure you're within the rules. Every now and then you'll get an enquiry/investigation, and if you're not within the rules then at a minimum you'll be paying back all tax owed, and possibly looking at a fine.

Breaking the rules of this scheme is really no different from under-declaring your earnings and paying too little tax.