Bike for Work schemes

Wheelybig

Hi,

Hope this is in the correct place!

Has anyone had any experience with a bike for work scheme? Ive read through the T&Cs and the end of the scheme seems a little open for them to say 'that will be another £1000 please'

I commute to work by bike most days and am looking to upgrade my current road bike, my company is running a scheme at the end of the month hence my ask.

Any experiences people have had, good/bad would be great

Thanks

WB

Pru

I don't have personal experience with the scheme, but people I've asked have always told me it's a bit of a scam.

Simontheintrepid

It's not so much a scam - you won't pay any more for your bike - but it's a case of the Government realising that actually this was a pretty sweet deal, so they moved the goalposts by introducing new guide prices last year on selling the bike after the 'rental' period (just after I committed to it :x). Some schemes still claim up to 40% off but that just doesn't happen any more.

The way around that would be to pay off the bike over the 12 months or however long, then if you stick with the job, don't buy the bike for another few years and let the value come down.

TBH now the gains are marginal you might be better off looking for a cheap 2011 bike and save all the faffing.

rolf_f

Simontheintrepid wrote:

Some schemes still claim up to 40% off but that just doesn't happen any more.

TBH now the gains are marginal you might be better off looking for a cheap 2011 bike and save all the faffing.

The above isn't really true. Basically, the savings are the same if you work for the public sector (where you generally never got the VAT saving anyway) but otherwise it is largely unchanged. The difference is that to avoid a high transfer charge, you have to transfer the hire scheme to the Cycle to Work company - after three years of that (paying nothing) you can transfer ownership to yourself at a nominal fee. Infact, if your bike is worth less than £500 new, the transfer fee is cheaper than the old final payment was.

So, basically, you pay much the same as you would in previous years but you don't buy the bike until after 4 years to avoid accusations that the one year old bike is being heavily undervalued. It's really the same as long as you don't mind that you don't technically own the bike for rather longer.

racingt

We run one. In fact I administer it, and it's a great deal.
Sponsored cycle ride last weekend which had 28 riders from a company of 200 shows that plenty of employees agree with me too,

Muffintop

I found it a good way of paying off a bike per month. They (well, my employer) didn't charge me the 40% for the bike after a year, it was alot less.

pieman99

I'm just applying for my bike through the scheme, mainly because i cant afford to pay for it all in one go, also the council i work for are now paying for the scheme themselves instead of a buying agent, so making some savings that way and can keep it for years before having to pay it of, they suggest leaving it for the full five years to get the maximum benefits!

Wheelybig

thanks for the replies.

I will be looking to use the full £1000 entitlement if i do choose to use it - the issue i cant get round in my head is that, obviously i will look after the bike, its a 3 year scheme (payment over 12 months) and at the end of it I would expect my bike to still be worth in the region of £300-400 maybe even more.

After paying around £750 i dont want to have to pay another few hundred pound, thus defeating the object.

Maybe i dont understand it properly - but this is how im thinking.

g00se

If you go with one of the major schemes, you won't end up owing the full second hand value at the end.

Previously, the sell on value was about the same as one month's repayment.

The tax man cottoned on and said if you did pay that amount, you would be liable to pay the tax on the underspend.

To get around this, the schemes said they would take ownership of the bike for 3 more years and lease it to you for no cost. Then you would owe them the second hand value of a 4 year old bike - which would be equivalent or less then a one month repayment according to the tax man's valuation. To make it simpler, the scheme asks for this value as a 'deposit'when they take ownership, so after that payment, there's nothing else to worry about.

Go to the Cyclescheme website to get a breakdown of your payments and savings using their calculator.

chiark

Lots of good information already, but it isn't a con. It definitely isn't as generous as it used to be.

I didn't use it, as I don't like being beholden to anyone and I was being asked to pay nigh on 600 quid to use a grand bike for a year and for it not to be mine. If I didn't like it, I couldn't sell it, and if I wanted to sell it I would have to buy it off the company first for a value agreed by the taxman.

If you're not planning on changing employer for 3 years, look at it as an interest free loan, i guess.

Also bear in mind you will struggle to get a discount off a bike if using c2w scheme.

I bought my cannondale for a mix of interest free credit and cash, got a good discount and got pedals and shoes thrown in. You can haggle when buying, but that disappears when you mention c2w.

RedJohn

Mine's jus come to an end from my old job, and I've just got the letter about the end of scheme transfer charge.

They basically said, the official value at 3 years old is 12%, so £120. We're not going to charge you that, we're just going to give you the bike for nothing. That means that you will be liable for tax on £120 benefit in kind, which is £24 or £48 depending on your tax band, declare it on your self assessment tax return please since you've left the company.
Which seems to me like a good way of going about it.

Oh yes, they also said there's a hand-back option, if you don't want to keep the bike, for which we will charge you a £96 admin fee ... :-)

In_the_big_ring

The government has set what the final resale price should be, can't remember what the 18 month was, but if you paid it off in 12 months the final payment is 25% of original price. Its true that if you had to pay 25% at the end of the period, you don't make much of a saving, but on a plus side you have had an interest free loan to buy the bike. You'll obviously save more if you are in a higher tax bracket.

There is another way though to make better savings. That is to get your company to award you the bike as a bonus (they won't be losing anything as you've already repaid them the entire cost of the bike). If it is paid as a bonus, then the only tax you'll be liable for is your income tax portion of the final payment price. So if we went with the same £1000 example, and you're in the higher tax bracket, the over the 12 months you repay about £480. At the end of the period you would be liable to repay £250 to own the bike outright (so you'd get a £1000 bike for £730), but if your employer gave you the bike as a bonus, then you'd only have to pay to PAYE on £250, so you'd get the £1000 bike for £580 if my maths has been correct.

g00se

In_the_big_ring wrote:

The government has set what the final resale price should be, can't remember what the 18 month was, but if you paid it off in 12 months the final payment is 25% of original price. Its true that if you had to pay 25% at the end of the period, you don't make much of a saving, but on a plus side you have had an interest free loan to buy the bike. You'll obviously save more if you are in a higher tax bracket.

There is another way though to make better savings. That is to get your company to award you the bike as a bonus (they won't be losing anything as you've already repaid them the entire cost of the bike). If it is paid as a bonus, then the only tax you'll be liable for is your income tax portion of the final payment price. So if we went with the same £1000 example, and you're in the higher tax bracket, the over the 12 months you repay about £480. At the end of the period you would be liable to repay £250 to own the bike outright (so you'd get a £1000 bike for £730), but if your employer gave you the bike as a bonus, then you'd only have to pay to PAYE on £250, so you'd get the £1000 bike for £580 if my maths has been correct.

Hi,

Sorry to be the pedant but the government haven't set what the resale price should be - they've specified what they expect the resale price to be - and that's what they'll expect to get tax back on.

There's absolutely nothing stopping the company selling it to you for 1p - but you'll be expected to pay income tax on any difference between what you pay and their assessed value.

So if the company sells it to you for £50 and the tax man says it's worth £250 - then you'll need to pay tax on the 'gained' £200.

Goalpie

My other half is just about to sign up to one of these schemes and basically on a £900 bike she'll be paying back £680. This includes the fee at the end of the scheme. If the bike is worth more than the final fee she will only be liable for the difference in tax which the scheme will then give back to you so you don't get charged anything extra. Seems pretty transparent to me. Plus she's getting from the LBS which means it all covered for warranty etc.

LBS's couldn't get anywhere near this much discount on last year's model, plus it's a good way of doing monthly payments plus she'll get a brand new bike.

RedJohn

In_the_big_ring wrote:

There is another way though to make better savings. That is to get your company to award you the bike as a bonus (they won't be losing anything as you've already repaid them the entire cost of the bike). If it is paid as a bonus, then the only tax you'll be liable for is your income tax portion of the final payment price. So if we went with the same £1000 example, and you're in the higher tax bracket, the over the 12 months you repay about £480. At the end of the period you would be liable to repay £250 to own the bike outright (so you'd get a £1000 bike for £730), but if your employer gave you the bike as a bonus, then you'd only have to pay to PAYE on £250, so you'd get the £1000 bike for £580 if my maths has been correct.

That's in effect what my old company did.

However, it doesn't matter how long you pay it back over, it matters how long the compnay 'owns' it before selling it to you. I paid it over 12 months, but I'm only owning it now after 3 years. I've been lent it by the company at no cost for the other two years.

RedJohn

And as for the t's and c's being open, as the OP said, that's unfortunately necessary.

To maintain the almost-fiction that the company owns the bike, and you just happen to be accepting a short term salary reduction, there can't be an agreed committment for you to own the bike after after the loan period - that would make it legally a hire purchase, and you would have to pay benefit-in-kind tax on the full value.

It is theoretically possible for the employer to take the p!$$ and demand a large amount at the end, and in fact someone on here posted that this had happened to them, perhaps a couple of years ago, so it depends on how much you trust your employer. It's pretty rare though, I've only heard about that one occasion. And you can always call their bluff and say, OK, you keep the bike then :-)

KnightOfTheLongTights

95% of the time it's a great deal

spend the full £1,000 and get the best bike you can - or an £800 bike and loads of accessories

It'll end up costing you £600-650.

That's the only mistake I made, not spending the full amount and going for a £600 bike.

mustol

I still think the scheme is excellent - next month I'll be picking up a new Wilier La Triestina - reduced in my LBS from £1,150 to £900 (my LBS do the bikes on the scheme at whatever price they are selling in the shop). I'm getting it upspecced (mainly tyres), taking the cost to £980. I think it'll cost me approx £660 over 12mths. Bargain!