Cyclescheme buying advice please

Graham K

Work have got on the cyclescheme lark so I am peeping around to possibly upgrade the 07 Rockhopper, initially I was going to upgrade the forks and front wheel as thats the only thing I aint done, but when your offered the chance of a new bike then :?:

So, whats the script with cyclescheme, find a bike for a grand and watch it go out of my wages for a year?
If so which bike, my Rockhopper has had some serious abuse and come back smiling for more, comfy to do the miles and sturdy enough to take abuse, never rode a full sus and being happy with a hardtail do i stay put?


Any help, advice, option or opinion on bike etc is more than welcome,
PS - Boardmans are an iffy 1 as our local halfords aint got the most clued up staff in there.

Cheers.
G

Briggo

Halfords have their own cyclescheme so unless your work specifically uses that you cant use them.

Cyclescheme on the other hand is used by thousands of bike shops across the country.

diy

Either keep your hopper or spend more than a grand.

its net vat, tax and ni, but you may pay a bit for the transfer at the end.

Carisman

Hey,

I believe the cycle to work scheme rules have changed recently, particulary with respect to the 'fee' when ownership of the bike is handed over to you. Check this out, as I'm not sure the scheme is attractive as it once was?

Briggo

Carisman wrote:

Hey,

I believe the cycle to work scheme rules have changed recently, particulary with respect to the 'fee' when ownership of the bike is handed over to you. Check this out, as I'm not sure the scheme is attractive as it once was?

:roll:

I'd advise you to read up on it yourself first before forwarding on 'hearsay'

Andrew_J_Heard

Briggo wrote:

Carisman wrote:

Hey,

I believe the cycle to work scheme rules have changed recently, particulary with respect to the 'fee' when ownership of the bike is handed over to you. Check this out, as I'm not sure the scheme is attractive as it once was?

:roll:

I'd advise you to read up on it yourself first before forwarding on 'hearsay'

bit harsh..............seeing as he's right

yes the cycle to work scheme has changed slightly in regards to the FMV (fair market value) that you pay at the end of the 12 months. it is now 25% on purchases over 500 so can eat into the money you were hoping to save originally etc.

but there is an option (at the moment) to lease the bike for another 3 years for a refundable fee of 7% of the original ammount borrowed.
its means techinally you wont own the bike for 4 years in the eyes of the law but the cycle to work scheme is still a good deal to get on if you havent got that lump of cash upfront . you will still save money just maybe not as much as in the very beginning of the scheme

diy

If there is any here say its this option to extend. I specifically mailed our scheme admin company on this and they said its up to each employer to decide. So don't assume you can avoid the final fee. If you are planning to buy new and you are a 40 or 50% tax payer or you need the benefit of an interest free loan then it may still be worth it.

The option to extend also breaks corporate accounting rules for operating leases (90/10 rule), so I think the cycle schemes will even come unstuck since the lease value exceeds 90% of the value.

Its about time they got some proper accounting people to look at this as there are so many ways around the problem without taking this approach.

I think its going to get killed off next year anyway which will be better for all consumers overall IMO.

benpinnick

Even if you do get stung for the fee you can avoid most of it by getting it put on your p11d.

It won't be killed anytime soon IMHO.

Briggo

Andrew_J_Heard wrote:

Briggo wrote:

Carisman wrote:

Hey,

I believe the cycle to work scheme rules have changed recently, particulary with respect to the 'fee' when ownership of the bike is handed over to you. Check this out, as I'm not sure the scheme is attractive as it once was?

:roll:

I'd advise you to read up on it yourself first before forwarding on 'hearsay'

bit harsh..............seeing as he's right

Its not though, everyone gets as far as the 25% FMV payable at the end of one year and stops.

Like you say, you extend it for a few more years, pay 7/12% up front and then its transferred into your name at a later date.

Regardless of whether your a 20/40/50% (+NI) rate payer you still save money and its a no questions asked interest free loan.

How in anyway whatsoever is that not attractive?

Carisman

Briggo,
Are you always this condescending?
I'm defo not just acting on hearsay... I actually have a bike through the cycle to work scheme... and I'm awaiting whether or not my company are running the scheme for additional years otherwise I'm not sure If I have to pay a 25% fee.

diy

Just to be clear - the transfer is assessed as a taxable benefit, so its tax on 25% of the bike not a fee of 25%.

And here is the simple change that would fix this.

I do not understand why the lease is based on 100% of the value. Revise the payments to be based on 75% with a final fee of 25% have you have the solution.

bagz3

Briggo wrote:

Andrew_J_Heard wrote:

Briggo wrote:

Carisman wrote:

Hey,

I believe the cycle to work scheme rules have changed recently, particulary with respect to the 'fee' when ownership of the bike is handed over to you. Check this out, as I'm not sure the scheme is attractive as it once was?

:roll:

I'd advise you to read up on it yourself first before forwarding on 'hearsay'

bit harsh..............seeing as he's right

Its not though, everyone gets as far as the 25% FMV payable at the end of one year and stops.

Like you say, you extend it for a few more years, pay 7/12% up front and then its transferred into your name at a later date.

Regardless of whether your a 20/40/50% (+NI) rate payer you still save money and its a no questions asked interest free loan.

How in anyway whatsoever is that not attractive?

he didn't say it wasn't attractive, just not as much as it was once........

the bike isn't guarenteed to be transfered to your name, its at your employers/cyclescheme's discretion....... most do however

Briggo

I'd love to see some data on how many companies keep the bike versus those that transfer them.

The scheme is still as attractive as it once was, all they've done is clarified a few pointers i.e. the end payment amount. Some companies were charging more than the suggested 7/12% as it was left to their discretion.

bagz3

at the end of the hire period (1 year), you pay 3 or 7% one off payment to continue hiring to bike. Value of bike under £500 its 3%, over its 7%. this is refundable should you return the bike after this extended period............

grim168

Our company is running another scheme this year. I bought a bike last time when the final value went up to 25% mid term. Our comapny stuck to 5% at the end of 12 monhs. If they do that again I'll have me a boardman full bounce this time. If its gonna be 25 % i shan't bother.

benpinnick

diy wrote:

Just to be clear - the transfer is assessed as a taxable benefit, so its tax on 25% of the bike not a fee of 25%.

And here is the simple change that would fix this.

I do not understand why the lease is based on 100% of the value. Revise the payments to be based on 75% with a final fee of 25% have you have the solution.

Its only tax on the 25% if you put it on the p11d as a BiK. Otherwise its 25% (inc VAT). The main reason companies don't like the concept of 75/25 split is because you cannot guarantee that the employer recovers all the costs, which they don't like. In principle you can do this of course!

bails87

grim168 wrote:

Our company is running another scheme this year. I bought a bike last time when the final value went up to 25% mid term. Our comapny stuck to 5% at the end of 12 monhs. If they do that again I'll have me a boardman full bounce this time. If its gonna be 25 % i shan't bother.

The HMRC issued guidance on what an expected value should be. If your bike is valued differently you/your employer may have to justify this.

If the bike is in particularly bad condition, then it could be valued at less, for example.

You don't necessarily pay the valuation though, you could recieve the bike as a benefit and then pay tax on the value of the benefit (£1k bike @ 25% = £250), the same as if you were paid £250, you'd have to pay tax on it.

Or you could keep the bike without taking ownership of it, so you keep using it and don't buy it for a couple more years.

diy

benpinnick wrote:

. The main reason companies don't like the concept of 75/25 split is because you cannot guarantee that the employer recovers all the costs, which they don't like. In principle you can do this of course!

Easily fixed at the point of contract.

FSR Si

I'm just coming to the end of my scheme and got the paperwork through on Monday telling me what happens now, they have given me 2 options

1st being to give them back the bike and call it a day with no extra cost.

2nd is for me to take ownership of the bike which my company are willing to give for free but the tax man wants his chunk, which is worked out this way...

For bikes under £500 the final value fee is worked out at 18% and for bikes over that 25%. So my £1000 boardman has its value set at £250 and because i am a 20% basic rate tax payer i have to pay 20% of that which equals £50 now the tax man has also decided instead of making this a one off payment i can fill in tax form P11d and pay the money through my tax code which means it will be spread over the year costing less than a £1 a week.

benpinnick

diy wrote:

benpinnick wrote:

. The main reason companies don't like the concept of 75/25 split is because you cannot guarantee that the employer recovers all the costs, which they don't like. In principle you can do this of course!

Easily fixed at the point of contract.

Err, I think its more hassle than its worth, and not that easy. If theres something you know that would help, shout it out!

Graham K

FSR Si wrote:

I'm just coming to the end of my scheme and got the paperwork through on Monday telling me what happens now, they have given me 2 options

1st being to give them back the bike and call it a day with no extra cost.

2nd is for me to take ownership of the bike which my company are willing to give for free but the tax man wants his chunk, which is worked out this way...

For bikes under £500 the final value fee is worked out at 18% and for bikes over that 25%. So my £1000 boardman has its value set at £250 and because i am a 20% basic rate tax payer i have to pay 20% of that which equals £50 now the tax man has also decided instead of making this a one off payment i can fill in tax form P11d and pay the money through my tax code which means it will be spread over the year costing less than a £1 a week.

So your final payment on a £1k bike is £50?
Did you set your monthly payments or are they set by the scheme, and what were they if you dont mind me asking?

FSR Si

Ive been paying £16.36 per week over 52 weeks which comes to £850.72 which is what my workplace paid for the bike (they claim the vat back). The £16.36 is deducted from my wage before tax so instead of me paying the £850.72 i pay 20% less which is £680. Then with the final value of £50 ive ended up paying £730 for a a 1k bike, paid for over 12 months with interest free payments.

I'd quite happily do it again and again and again

steve_muzzy

Both me and the mrs did this over the last couple of years, she works for rbs and they have an extra special set up, however basically we got a 2009 trance x5 and a board man team carbon roaddie 2010 which both are now ours for about 1400

The only issue was having to get full rrp bikes, you could nearly save same if you buy last years kit however The interest free alone is worth it

We also have a friend who got a 2010 board man hardtail, which they broke to put bits on a couple of bikes and we worked out to buy the components separately would have cost over 1200 for 800 they actually spent

Graham K

FSR Si wrote:

Ive been paying £16.36 per week over 52 weeks which comes to £850.72 which is what my workplace paid for the bike (they claim the vat back). The £16.36 is deducted from my wage before tax so instead of me paying the £850.72 i pay 20% less which is £680. Then with the final value of £50 ive ended up paying £730 for a a 1k bike, paid for over 12 months with interest free payments.

I'd quite happily do it again and again and again

Thats the kinda thing ive been wanting to hear, now time to get shopping for a new bike.

diy

benpinnick wrote:

diy wrote:

benpinnick wrote:

. The main reason companies don't like the concept of 75/25 split is because you cannot guarantee that the employer recovers all the costs, which they don't like. In principle you can do this of course!

Easily fixed at the point of contract.

Err, I think its more hassle than its worth, and not that easy. If theres something you know that would help, shout it out!

A simple obligation to purchase in consideration of the discount received.

In consideration of the discounts received, you hereby agree to purchase the above item at price (x) on or before date y. In the event that you are unable to purchase the above item you understand that the discounted lease price is no longer applicable and that you will be charged the full lease value for the bike, which you will return on or before date y.

benpinnick

Which would explicitly invalidate the tax savings. Try again.

diy

Is there a tax requirement for the lease to equal 100% of the purchase cost?
is there a rule saying the employer cannot discount the lease by 20%?
Is there any accounting rule that says the lease must equate to more than 80%
Is there a tax rule that would impose a benefit for the discount?

bagz3

i decided not to opt for cylcescheme purely based on the fact the bike i wanted wasn't available in any cyclescheme shop..............

Rockrider 8.1 2010 £450, full ownership and about £15 of freebies thrown in. Similar spec bike with cyclescheme would cost what....? £600+?

For me it was a no brainer............. i suggest you decide what bike you really want and then decide the best way to finance it........

Shotsaway

FSR Si wrote:

Ive been paying £16.36 per week over 52 weeks which comes to £850.72 which is what my workplace paid for the bike (they claim the vat back). The £16.36 is deducted from my wage before tax so instead of me paying the £850.72 i pay 20% less which is £680. Then with the final value of £50 ive ended up paying £730 for a a 1k bike, paid for over 12 months with interest free payments.

I'd quite happily do it again and again and again

I think you will find that you have saved even more. You haven't included your National Insurance saving at 11%. So £850.72 less 31% (£263.50) = £586.50

Briggo

bagz3 wrote:

i decided not to opt for cylcescheme purely based on the fact the bike i wanted wasn't available in any cyclescheme shop..............

Rockrider 8.1 2010 £450, full ownership and about £15 of freebies thrown in. Similar spec bike with cyclescheme would cost what....? £600+?

For me it was a no brainer............. i suggest you decide what bike you really want and then decide the best way to finance it........

I think you'll find to get a 'similar spec'd' bike at £600 with the savings of Tax/NI it would be down to £427, factor in a 7% charge after a year of £42 to extend the period and avoid paying the 'scary' 25% FMV and its £469.

Could save more if a higher rate taxpayer.

Similar cost, spread across the whole year with no interest payable.

Joey1986

Ive done the cyclescheme twice albeit the last one was about two years ago. I found that it was decent at the time, I obtained about a 47% saving which is phenomenal, think I was paying about £50 per month after tax and at the end I had to pay a one off fee of about £70. I got a Scott Scale 40 which I sold after a year for £550.00 and a Cube LTD race the second time.

Ive heard its changed somewhat since then and the potential savings are much less. If youre seriously considering it then Id go for the Cube LTD Race 2011, if the scheme is limited to £1000 then just tell the bike shop that you'll pay the difference. I've always found they're fine with it.