Cycle2work scheme

samyg

does anyone have much understanding of the cycle to work scheme?

i purchased a specialised pitch last year on the scheme, took the maximum £1000 voucher and put some cash towards it. Thought i had got a good deal until i was setting it up for another lad at work when i noticed what happens at the end.

Turns out i have to buy the bike of the cyclescheme, re apply for loaning the bike or give it back!!!!!

I pressumed once i had paid the money back to my work the bike would be mine??

Can anyone help??

Daz555

My company charged me about £20 to buy my FSRxc at the end of my C2W year. This was a couple of years ago so things may have changed.

How much is your company expecting you to make as a final payment?

samyg

they have not said anything yet, its just something me and the accounts were discussing today after reading more into the scheme. It says i have 3 options

1. buy the bike off the cyclescheme for 18-25% of the total value of the purchase which could be £250
2. re hire the bike which probably mean paying for it everymonth still
3. or give it back to the cyclescheme

RevellRider

samyg wrote:

does anyone have much understanding of the cycle to work scheme?

i purchased a specialised pitch last year on the scheme, took the maximum £1000 voucher and put some cash towards it. Thought i had got a good deal until i was setting it up for another lad at work when i noticed what happens at the end.

Turns out i have to buy the bike of the cyclescheme, re apply for loaning the bike or give it back!!!!!

I pressumed once i had paid the money back to my work the bike would be mine??

Can anyone help??

I have a decent understanding of the C2W scheme. When you signed your contract you agreed to hire the bike of your employer and the payments towards this hiring was the salary sacrifice coming out of your wages. As it's a hire fee it means that at the end of the year you don't own the bike but your employer does.

Now that your hire period is up, you have the option to buy the bike off your employer. This will be a single payment at what HMRC has decided to be a 'fair value', on a bike above £500 is 25% meaning your saving isn't that great. Good news is that written into the cycle to work documentation is what is called 'Continuation of Use' which means you can carry on using the bike with out making any more payments, but it doesn't mean it's yours. With the continuation of use the 'fair value' of the bike goes down each year.

Of course with cyclescheme being a business, people keeping hold of bikes for 4 or 5 years and not taking out any new cycle to work schemes would affect there trade massively. So they offer anyone on their scheme the ability to take the continuation of use option with them and not your employer. They ask you pay a 'deposit' on the bike and they take ownership of the bike whilst still letting you use it. After I think 4 years, they then give you the option of either giving the bike back to the them and reclaiming you deposit or you keeping the bike and the deposit being used for the transfer of ownership charge

The two final options are either you can give the bike back, which I don't think you'll do seeing as you've put some of your own money towards it or, if your employer is fair they may let you have the bike at a lower price then HMRC values it at. If they do this final option you will pay National Insurance and Income Tax on the difference.

Hope this has helped a little

RevellRider

samyg wrote:

they have not said anything yet, its just something me and the accounts were discussing today after reading more into the scheme. It says i have 3 options

1. buy the bike off the cyclescheme for 18-25% of the total value of the purchase which could be £250
You'd be buying the bike off your employer, they own the bike not cyclescheme
2. re hire the bike which probably mean paying for it everymonth still
It's a fixed term hire fee, which means after 12 or 18 months (depending which you went for) there is nothing more to pay
3. or give it back to the cyclescheme
See my above post for more answers

samyg

cheers for the info,



it seems that if i have to buy the bike off my employer i have not gained anywhere near the savings it shows you on their calculations.

it turns out that the scheme is a bit of a con

RevellRider

The table can be found here - http://www.hmrc.gov.uk/manuals/eimanual/eim21667a.htm

Remember, you don't have too buy the bike off your employer. You can carry on using it. And there.

The scheme is also pretty transparent with the charges, you do make the saving that they say you'd make. It's just that Mr Taxman wanted a better cut, so he changed what you could call a fair market value for a bike.

Being on cyclescheme, I would take them up on their offer to transfer ownership of the bike to them and keep it for the next four years. The difference in the cost now and the cost this time last year is less than £20 if I remember correctly

ollie_lucas1985

The scheme was great when It first came in, saved about £300 or so.. but yea since they changed the rules theres no real gain for short periods unless you extend the hire purchase for 4 or so years.. but the thing to note is you dont have to pay

You could just hire it until you look for work elsewhere then get a valuation and pay the final payment..?

samyg

thats pissed on my chips a bit, i was wanting to sell it allready and upgrade,

bamba

you can extended the hire period, from another 12 months to 3 years, i had £1000 , to extend the total period to 4 years i will pay a one off payment of £70 to do this,then after the time is up the bike is mine, no more money,during this extended period i dont think anyone is really bothered if you still have the bike,as they've had there money

paulbox

samyg wrote:

it seems that if i have to buy the bike off my employer i have not gained anywhere near the savings it shows you on their calculations.

it turns out that the scheme is a bit of a con

I'm in a similar position to you mate, I took out a £1k voucher and put £1k of my own towards my Anthem.

During the year the IR changed the rules on the final valuation/payment which means it costs you more to buy your bike. If I get charged £250 to buy my bike I don't think I will have saved hardly anything on the £1k voucher.

I haven't looked in to extending the "hire period" as others have mentioned on here, but to be honest I think I'll probably just pay whatever they quote me as a final payment and get out. It's getting on my t!ts now to be honest...

aidso

My contract is about to finish this Friday on my Specialized FSR XC and I will be expecting a bill around the £250 mark to own it. Re: the continuing the contract for another 2 years- I guess its your own personal choice but I don't see this as a good option. Surely you would want to own the bike and not just continue to renting it?

I bought an additional bike (from my own pocket) last week and mentioned to my LBS about the C2W scheme and he didn't think it was legal for HMRC to change the contract mid way through i.e. we were told a final rate of 5% but now its ~21%. Good luck arguing that with them though. Plus, the face the fair market value on the original price i.e. £1000. Your bike isn't worth that now - I'd be lucky to get £600 for mine.

RevellRider

aidso wrote:

My contract is about to finish this Friday on my Specialized FSR XC and I will be expecting a bill around the £250 mark to own it. Re: the continuing the contract for another 2 years- I guess its your own personal choice but I don't see this as a good option. Surely you would want to own the bike and not just continue to renting it?

You aren't renting the bike, you're hire it with a fixed payment period. After the last payment you just carry on using the bike

I bought an additional bike (from my own pocket) last week and mentioned to my LBS about the C2W scheme and he didn't think it was legal for HMRC to change the contract mid way through i.e. we were told a final rate of 5% but now its ~21%. Good luck arguing that with them though. Plus, the face the fair market value on the original price i.e. £1000. Your bike isn't worth that now - I'd be lucky to get £600 for mine.

Have a read of your C2W contract and tell me where it says that a fair market value is 5% of the value? It doesn't. That is why HMRC have put a value to it, makes it easier. Of course, if you want to tell your employer that you think your one year old bike is worth £600, go ahead and see if they charge you £600. Because that is what the fair market value is for. Working out how much a bike of X years old is worth

heez29

RevellRider wrote:

I bought an additional bike (from my own pocket) last week and mentioned to my LBS about the C2W scheme and he didn't think it was legal for HMRC to change the contract mid way through i.e. we were told a final rate of 5% but now its ~21%. Good luck arguing that with them though. Plus, the face the fair market value on the original price i.e. £1000. Your bike isn't worth that now - I'd be lucky to get £600 for mine.

Have a read of your C2W contract and tell me where it says that a fair market value is 5% of the value? It doesn't. That is why HMRC have put a value to it, makes it easier. Of course, if you want to tell your employer that you think your one year old bike is worth £600, go ahead and see if they charge you £600. Because that is what the fair market value is for. Working out how much a bike of X years old is worth

Wouldnt it be FMV of the voucher? Because he's added to the voucher.

RevellRider

Yes, because as far as his employer and the taxman know he hasn't added anything to the value of the bike

chrisga

How did you guys end up adding to the value of the voucher? I didnt think Bike shops were allowed to accept that with c2w. Bit of a gamble isnt it? If the employer wanted there bike back at the end of the hire period. how would that have worked?

RevellRider

They asked. It's a bit of a minefield as some shops will and some shops won't but 9 times outta 10 in my experience the shop will say yes.

aidso

Oh I totally agree the contract doesn't say that, but at the time they keep quoting the 5% figure and now it's 4 times that.

The scheme does still give you a "discount" compared to paying for it yourself but just not as much as on previous years.

*AL*

ollie_lucas1985 wrote:

The scheme was great when It first came in

It was, but too many people posted on the net they intended to buy a bike they had no intention of riding to work/adding cash to buy a more expensive bike/buying upgrades for another bike with the voucher etc etc etc and HMRC decided to tighten up the scheme somewhat.

We (well not me, I kept my dealings to myself) only have ourselves to blame.......

paulbox

chrisga wrote:

How did you guys end up adding to the value of the voucher? I didnt think Bike shops were allowed to accept that with c2w. Bit of a gamble isnt it? If the employer wanted there bike back at the end of the hire period. how would that have worked?

Every single shop I asked said that it wouldn't be a problem to "top-up" my voucher. I have heard others say that Halfords won't let you do it, but I didn't go there.

And yes it is a gamble, but when I was due to save £350 on the £1k I thought it was a gamble worth taking.

mintsauce5

my employer has been ok with our c2w scheme , mine ended in january , £1000 voucher , final payment of approx £58 which equivelent to what my monthly payment was plus VAT and we are paying the tax on the difference between £58 and what the hmrc fair market value is , which was approx £220 , so we are paying the tax on £162 over twelve months through our pay packet so it works out about an extra £30 , which is still not a bad saving on the bike itself

aidso

I went around to Finance this afternoon to ask what happens at the end of the contract an they didn't even know inwas about to finish ffs.

Is that 18 payments and then a 19th payment of £58? Or were all your payments £58?

mintsauce5

my monthly payments were about £47 , 18 of those and then the 19th was £58