Buying - Cycle to Work Scheme v Sales v London Cycle Show

hambo

Hi All

About January time I will be looking to buy a bike. I have 3 options as below and was wondering which of these would be best:

Option 1 - purchase a bike through the Cycle to Work Scheme my work are involved with. However, I understand from some of the websites I am interested in buying a bike that the quote I may receive would be (a) not necessarily the same price as the web advertised (b) quote may incur a fee as I have seen from other blogs on this website (c) slight changes to the scheme with regards to VAT make it not as competitive as it was previously.

Option 2 - London Cycle Show in Excel in January - are the bikes on sale better value than web price or option 1 above?

Option 3 - Order a bike online in the sale

There only seems to be one bike that matches up to what I want in a bike. So I have the three options above, but which is likely to offer the best price?

Also at bike show on the website it mentions about trying out bikes but I can't see how as I would imagine it comprises of loads of stands back to back (never been to a bike show). Or do they have a stationary cycling attachment etc?

Tried searching through the forums before posting this but can't find any info.

sloppyschleckonds

Option 4 - go to your local bike shop

ahbtsang

Just wondering.. Will there be discounts on bikes in the London cycle show? I went there last year, which they only had a tiny sales corner and was selling mostly clothes..

t5nel

Option 1 you can *still* go to LBS if you like - just dont expect discount as they only get 90% of the face value of your voucher AIUI.

Cyclescheme only really works out well if you are a higher rate taxpayer - if that is not the case I think you can do better in the sales.

Tim

hambo

Thanks Tim, that's what I was thinking but wasn't sure.

Might go bargain hunting in the sales.

t5nel wrote:

Option 1 you can *still* go to LBS if you like - just dont expect discount as they only get 90% of the face value of your voucher AIUI.

Cyclescheme only really works out well if you are a higher rate taxpayer - if that is not the case I think you can do better in the sales.

Tim

rolf_f

t5nel wrote:

Cyclescheme only really works out well if you are a higher rate taxpayer - if that is not the case I think you can do better in the sales.

This isn't true really. Even without VAT discounts (which I never had anyway) C2W still works out at least as good as all but the best sales. Furthermore, if you don't go mainstream, you probably won't find much sales discount anyway - none of the bikes I bought on C2W ever end up much discounted at all. Ultimately, if you can find what you want in the sales in the correct size for over 30% off then you are probably best off taking that route. Otherwise, C2W is still very useful.

t5nel

Rolf F wrote:

t5nel wrote:

Cyclescheme only really works out well if you are a higher rate taxpayer - if that is not the case I think you can do better in the sales.

This isn't true really. Even without VAT discounts (which I never had anyway) C2W still works out at least as good as all but the best sales. Furthermore, if you don't go mainstream, you probably won't find much sales discount anyway - none of the bikes I bought on C2W ever end up much discounted at all. Ultimately, if you can find what you want in the sales in the correct size for over 30% off then you are probably best off taking that route. Otherwise, C2W is still very useful.

I didn't say that it is *never* as good as sales...but was implying that you are only likely to make a worthwhile saving (to be weighed against the significant limitations of C2W! (bike is stolen, you change employer etc.)) if you are a higher rate payer - that is what I meant by better. I ABSOLUTELY stand by that and feel it is true. :? Rather than getting drawn into an undignified quarrel, to better explain my post I have illustrated an example which does, as you suggest, require going for a mainstream bike from an online retailer. If we are to respectfully disagree we can do it on the basis of something quantitative.

Of course it is also complicated by the new final value of the bike (after the 1 yr lease ends) which is dependent on the RRP of the bike AND whether your scheme provider will continue to 'own' the bike for a further period to reduce this final value.

I *did* do C2W but it was a close thing. I think you have to ask yourself for the hassle that C2W can be, is it worth the small saving against a good deal in the sales?

My worked example is below, I am NOT an accountant! (but I dont think that I am orders of magnitude out. ) For the sake of saving ~ £40 on a £1250 bike and not actually owning it for four years...I'd buy in the sales. If anyone wants to improve my calcualtions then feel free

But I guess do your own calculations - if the bike you really want is not discounted then perhaps the saving will noticable...

example you can buy a 2011 Cube Streamer for £859 (just a little more than 30% reduction) from Chain Reaction in most sizes this was £1250 in my LBS. On cyclescheme the discounts would have meant...

RRP £1250
RRP less VAT £1041.66
12 months gross salary reduction of £86.81
Assume 20% tax rate and 10.4% NI contributions net salary reduction of £60.42
Over the year it will cost you £725.04

FINAL FAIR MARKET VALUE PAYMENT
At the end of the year you will either have to surrender the bike OR pay a final payment. If you want to own the bike outright immediately (and be entitled to join another scheme) you have to pay 25% of the RRP of the bike so suddenly our bike has cost the basic rate payer £1037.54

IT DOESN'T HAVE TO BE THAT BAD THOUGH
If you are prepared to let the scheme retain ownership for a further 3 years (presumably meaning you can not buy another bike on scheme ) you can instead make a payment of 7% of the RRP so the bike costs £812.54

rolf_f

Actually, I think the ownership issue is the only real bother with the scheme.

Incidentally, after the first year, when you do the ownership transfer from Employer to Cycle Scheme, you are then eligible for the C2W again.

I've never experienced the 'hassle' that people often refer to about C2W. In my case, all I ever do is fill out the C2W form which takes about a minute, wait for the voucher, present to shop, obtain bike. The transfer of ownership involved me selecting from a pick list of three options and pressing 'send'. Marginally more hassle than a credit card payment, probably less than using an alternative loan (not that I ever would do that).

Not really hassle at all for me.

t5nel

Hopefully we have not gone too far OT

I think that the efficiency of the scheme can vary by employer. But for me the disadvantages are...
In my case the scheme is only open twice a year - if you miss it tough. I have no doubt other employers do better!!!
Once you have committed to the scheme it takes ~ 6 weeks to get the voucher (again my employer I think). Stock can vary dramatically in this time!!! I was going to get a cube Agree from LBS but by the time I had the voucher all the compacts had sold out (and I really didnt want a triple) so ended up going to Ribble where the 'admin' fee also needs to be considered.
If your bike is stolen or you end employment then you need to settle your account.

That is interesting about being able to take another bike after 12 months though - I will check if that is the case for me! Thanks for the pointer. Checked it here (point 6) http://www.cyclescheme.co.uk/files/hmrc ... e_faqs.pdf and looks like I wont have to wait 4 years for another bike

rolf_f

Ahhh, yes. Voucher wait can be an issue. I think I've generally waited less than two weeks. And my bikes have all been factory orders so wait wasn't an issue (though I did hold my second voucher for about 6 months whilst being messed about by the factory before eventually buying something completely different! Can't blame that on the scheme though ).

beancounter

As of January 2012, monthly cycle to work scheme rentals will be subject to VAT at 20%.

This surely now renders the scheme dead in the water?

bc

bompington

beancounter wrote:

As of January 2012, monthly cycle to work scheme rentals will be subject to VAT at 20%.

This surely now renders the scheme dead in the water?

bc

That depends who you ask.
For those of us who don't work for a VAT registered company anyway, it will make no difference. CBA to read all the linked stuff from cyclescheme (in this tab or a new one ;-)) but it's hardly "dead in the water".

It may not be possible for a lot of people but when you work for a small business, it's really easy to bypass commercial operators like cyclescheme with their 10% cut - all the employer needs to do is buy the bike & have some kind of contract for the salary sacrifice, in fact I reckon if I play my cards right my next C2W bike will be bought over the counter by me with a roll of cash.

beancounter

bompington wrote:

That depends who you ask.

I hadn't realised that the VAT added to the rentals merely increases the amount of salary sacrifice, thereby increasing the amount of income tax saved.

Bit of a pointless exercise by the HMRC...

bc

t5nel

Hmmmm with the VAT ruling AND the final value payment you are really looking at a 25% discount for a basic rate payer. Still worthwhile for higher rate payers I think.

rolf_f

beancounter wrote:

bompington wrote:

That depends who you ask.

I hadn't realised that the VAT added to the rentals merely increases the amount of salary sacrifice, thereby increasing the amount of income tax saved.

Bit of a pointless exercise by the HMRC...

bc

Oh I don't know - the scheme remains open retaining Govts attempts to claim green credentials but the more hysterical are put off using the scheme. A bit of a result I'd have thought.

FWIW, all of my C2W purchases have been without the VAT discount and they were worth it for me.

giant_man

ahbtsang wrote:

Just wondering.. Will there be discounts on bikes in the London cycle show? I went there last year, which they only had a tiny sales corner and was selling mostly clothes..

I doubt it very much, never had such thing at events like this