Selling Cycle2work to my boss

portland_bill

Just looking for a bit of advice from the salesmen and women amongst you all.

I work for a privately owned hotel in the darkest depths of rural Northumberland. The owner is a nice enough bloke but very wealthy and spends most of his time galavanting and showing off to people of moderate stature. I don't see him very often.

My boss is also a nice bloke but he's in his mid 50s and although gutless, he's rather pompous.

I want a new bike. I would also like to commute on my bike sometimes even though it's a 43 mile round trip on rural roads.

I'm struggling to think of how to sell the cycle2work scheme to him. I appreciate that it is supposed to reduce their NI payments the more people who take advantage of it, but we're a reasonably small hotel and we don't have a huge staff membership so I'm not sure if anyone else would be interested in the scheme. As far as I can tell, he's just going to see it as more work for the accounts lady which he won't be overly enthusiastic about.

My wife has also asked me to ask about childcare vouchers so I feel like I'm going to b hitting him with a double-whammy.

Can anyone give me any ideas for the best way of selling the scheme to him so he can at least feel marginally motivated to ask the owner?

joelsim

Just ask him. It's worth over £1500 for the childcare and C2W together. Offer to do the legwork.

portland_bill

Is there much in it like? I'm really not a very well organised person. I'd be happy to set the ball rolling, but I'm not sure how much use I'd be with the numbers..

joelsim

You don't need to do the numbers, the schemes are already set up and managed. It's very simple. My work have just done it and I was the only one interested.

It saves them money. It saves you money. It's next to no work at all.

http://www.cyclescheme.co.uk/

http://www.cycle2work.info/

http://www.bike2workscheme.co.uk/

Loads of different schemes to choose from. Have a look at the Employers sections of the above, and ring your favoured one to get all the lowdown, then when you speak to your boss you will be able to tell him exactly how easy it is.

portland_bill

Excellent, thank you very much for the advice! Very helpful!

The Rookie

For every £1K you take up on 'salary sacrifice' schemes like C2W he'll save £120 on employers NI contributions.....after that he recovers the full purchase cost (including the VAT he will have reclaimed) from the employee before selling the bike the employee has now paid for once anyway!

Argument sold to PB!

Simon

portland_bill

Thanks so much guys. I'm gonna go through those websites and see what I can put into the admin side of it in an effort to keep their input to a minimum in which case he shouldn't have a problem with it.

Just one more question though, I've looked through two of the websites and the only bit I'm struggling to understand is the "end of agreement" situation. There seems to be a few options, one is for the employer to take the bike back which I can't understand the reason or fairness behind since the employee has just finished paying for the bike and should in theory own it then. Another is for Cycle2Work or whoever to take one more payment and allow the employee to use the bike for another 3 years before making another small payment and taking ownership of the bike. I don't get these options.

Surely after I've made 12 monthly payments, I've paid the purchase cost of the bike and should be entitled to walk away with the bike. Is this not the case?

Kieran_Burns

Portland Bill wrote:

Thanks so much guys. I'm gonna go through those websites and see what I can put into the admin side of it in an effort to keep their input to a minimum in which case he shouldn't have a problem with it.

Just one more question though, I've looked through two of the websites and the only bit I'm struggling to understand is the "end of agreement" situation. There seems to be a few options, one is for the employer to take the bike back which I can't understand the reason or fairness behind since the employee has just finished paying for the bike and should in theory own it then. Another is for Cycle2Work or whoever to take one more payment and allow the employee to use the bike for another 3 years before making another small payment and taking ownership of the bike. I don't get these options.

Surely after I've made 12 monthly payments, I've paid the purchase cost of the bike and should be entitled to walk away with the bike. Is this not the case?

One of the fundamental points missed by people using the CTW scheme is that the company OWNS the bike and lease it to you for the period.

You are NOT paying it back, you're paying for its use. What the company then decides to do at the end of the lease period is up to them.

What actually happens is that you are meant to make a fair market payment for the residual value of a 1 year old bike. This was generally a token amount but is now set at 25% of the original purchase price by the company.

The small amount to lease for 3 more years and THEN a token amount is the way around this issue

The Rookie

The FMV is not set at anything, HMRC have issued guidelines (which differ for bikes over and under £500) which can be deviated from IF it can be justified, otherwise the employee would be liable for a tax on the benefit in kind recieved.

Simon

portland_bill

I see a little more clear now. So you're not actually paying the cost of the bike over the 12 months, just leasing it and then you have the option to make a fair payment to take ownership of the bike. Definitely makes it seem more clear.

Would you get some kind of indication of what the final payment might be before taking out the agreement or is it literally down to the employer to decide? Just coz in theory you could end up no better off if they ask you for a hefty payment at the end or am I completely confused?

pdw

That's one of the other "details" of the scheme: there can be no commitment to actually offer to sell you the bike at the end of it.

In practice, the employers are running the scheme in order to provide employees with a benefit, so they're unlikely to do anything other than sell it to you for the minimum possible.

Only the rental payments can be done tax free, which is why most of the value of the bike is covered by the rental payments, and the final payment is kept minimal.

It's also worth pointing out that there's no requirement to use a commercial scheme operator, and you'll get a better deal if you don't. There is some effort required to make sure that you understand exactly how the scheme has to work, and that the paperwork for the hire part of it is in order, but it's all online if you've got enough time to spend.

portland_bill

How would I find the information on how to utilise the benefits without using a commercial scheme operator? That sounds worth the extra effort.

pdw

Google is your friend, but here are some links to get you started:

DfT guidance on the scheme:

http://www.dft.gov.uk/pgr/sustainable/c ... kguidance/

HMRC guidance on valuing the bicycle when transferring to employee:

http://www.hmrc.gov.uk/manuals/eimanual/EIM21667a.htm

Group credit licence that allows your employer to rent you a bike with a value of £1000 or less:

http://www.oft.gov.uk/OFTwork/credit-licensing/cycle

Example paperwork from Wiggle:

http://www.wiggle.co.uk/Documents/Wiggl ... _Forms.pdf

A good source of information is the online retailers who don't detail with scheme operators (e.g. Wiggle) as they have guidance on how to implement the scheme yourself.

portland_bill

Ok, so I've just had a good read through the Wiggle documentation that I downloaded from the link you provided.

Am I right in thinking that basically I can use that as a template and just type up a new contract with pretty much the same wording, only aimed at a different supplier with the appropriate corrections?

Once the paperwork is signed, my boss should be able to place the order by card or cheque, and whatever else is left to do will be sorted out by our accountant (adjusting salary etc..)?