CycleScheme - Is it worth it?

nacnudsmada

pdw wrote:

nacnudsmada wrote:

When I had a chat with the guys at the scheme they explain that the employer has to put the money up front for the bike 1st? Then that's when the tax break comes in to pay the boss back (my understanding)
So what if the company does not sign up for it?

Who do you mean by "the guys at the scheme" ? I assume you mean people at Cyclescheme? Once again, Cyclescheme are a commercial company, you do not have to sign up with them to make use of the tax break, and you can get a better deal if you don't.

The normal way that a scheme works is:

1. Company buys a bike.
2. Company rents the bike to the employee for 12 months. The payments for this part can be made from your pre-tax earnings. That is the tax break.
3. Company offers to sell the bike to the employee. There is no tax break for sale of a bike, so this must be done at a "fair market value", or it will incur tax.

The fact that the tax break exists for (2) but not (3) means that the company will typically recoup most of the cost of the bike through (2) and minimise the payment for (3). HMRC have specified minimums for what it considers "fair market value" for a bike of a given age and value.

In short, my employer cannot put the money done upfront to buy the bike, as if everyone in the company does it it will struggle!
so sadly i am back to saving my coppers in my piggy bank and looking for the best deal!

ricky1980

pdw wrote:

There's no reason why the rental payments that you make should add up to the full cost of the bike. If your scheme charges you the full cost of the bike in rental fees, and then a further fee for transfer, then it's not a very good scheme.

i think that's how they make money tho. otherwise they don't make any money from the scheme???

pdw

ricky1980 wrote:

pdw wrote:

There's no reason why the rental payments that you make should add up to the full cost of the bike. If your scheme charges you the full cost of the bike in rental fees, and then a further fee for transfer, then it's not a very good scheme.

i think that's how they make money tho. otherwise they don't make any money from the scheme???

Who's trying to make money? My employer certainly doesn't expect to make a profit on the scheme - it's something it provides as a benefit to its staff.

Commercial scheme operators like Cyclescheme are trying to make a profit, but you'd think that the 10% of the price of the bike that they charge the retailers would cover that.

As it happens, most employers do make money on the scheme anyway, as they save money on employer's NI contributions. No reason why they can't pass on that saving to employees...

spong

I have just finished paying for a bike through the NHS scheme (can't remember what the name of it is, it's not CycleScheme but the same idea). Has been relatively painless but no great saving. Bike cost £999. I had to pay £125 admin fee to the seller, £999 in monthly payments before tax (so, as a basic rate tax-payer, the equivalent of about £650 take-home?) then a final payment of £120 to the NHS. I wouldn't bother again...

ricky1980

tbh any bikes under 1k is generally a good idea to get through the tax break system and keep for years and then you just pay a notional fee to keep it. but if you want to use the scheme against an expensive bike, might as well shop around, the margin is huge on those bikes and someone is always willing to have you custom to shave off that £2-300 quid (assuming you are buying something that's 3K+)

Pufftmw

alimcphail81 wrote:

Hi!
I have recently scored a new permanent job and my employer offers CycleScheme. Is it worth doing? I have read a lot of blurb about it and articles on Bike Radar and other sites but I would really like the opinion of someone who has actually got a bike this way.

Thanks in advance

Yes, if the bikeshop forget to charge the Company and the Company neglects to take the requisite payments off you