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Cyclescheme question

anish24anish24 Posts: 11
edited June 2014 in Commuting general
Hi Guys

Anyone done cyclescheme through their workplace? was just wondering how the whole ownership thing works - do I actually own the bike or is it under hire? Also read that after 12 months you can pay 7% of the bike for another 3 years then they offer you ownership at the end of this period? Am I correct?

Also what would happen if I left my job would I have to pay the remaining fee?

Cheers

Posts

  • anish24anish24 Posts: 11
    Also how long does the vouchers take to come once you've got your quote etc..
  • The RookieThe Rookie Posts: 27,748
    You don't own the bike until after the end of whatever the lease period is, most schemes after the 1 year lease will let you either buy the bike or hire it for another 3/4 years for a nominal sum (usually about 1 months payments) to get around the taxation problem if they were just to give it to you.

    Is the scheme actually cyclsesheme (a specific provider) or some other cycle to work scheme provider?

    If you leave you have to pay the remainder of the 1 years lease and get no tax relief on that amount.
  • anish24anish24 Posts: 11
    Thanks for the reply! Yes it is the actual cyclescheme - clears things up for me!
  • BigLightsBigLights Posts: 464
    I do it. There are savings, but not as much as you'd think. The repayments come out of your paypacket, gross, for 1 year. At the end of that year you're either taxed on the 'market value' of the bike, or you pay another nominal amount (I think about £30 from memory) to extend the lease another 3 years until the value to the bike can be written down to almost nothing, thereby avoiding tax. You do not own the bike during these 1 or 4 years, your employer does. The time it takes depends on how speedy your employer is in sorting it out - you go select a bike, get the bike shop to fill out a voucher, go back to the finance people at your place, and get them to put things in motion. I'm lucky in that I sit about 3 metres away from the relevant guy at my place.

    What happens at the end of the hire period?

    In order to preserve the tax benefits of the scheme, there can be no guarantee or obligation to transfer ownership to the employee immediately after the hire period has ended. However, employers generally choose to offer this option in addition to others, either directly or via Cyclescheme.

    At the end of the hire period, Cyclescheme will contact employees to discuss the options available.

    The most attractive option for employees will be to pay a small, refundable deposit (3% or 7% of the equipment value*) and continue to use the bicycle or safety equipment for an extended period of up to 36 months.

    At the end of this period, if the employee does not wish to keep the bicycle or safety equipment, then Cyclescheme will refund the deposit in full. Alternatively, Cyclescheme may at its discretion, offer ownership of the bicycle or safety equipment to the employee at this point, and no further action or payment will be required if they wish to keep the bicycle or safety equipment.

    For more information, please refer to the article 'HMRC Market Value Clarification' in our 'Employer Updates' section, or click here to watch our website video guide to our simple end of hire process.

    * the lower figure is for an equipment value of less than £500 and the higher one for equipment value of £500 or more. These figures include VAT.
  • snowstersnowster Posts: 582
    So after 4 years of having the bike it may still not be yours?
  • snigsnig Posts: 428
    what are the savings to be made? must be a lot for all the paper work involved?

    I've also read a lot of the bike shops will only let you have a non discounted bike on these types of schemes, so no discounted last years models to be had!
  • tangled_metaltangled_metal Posts: 4,015
    If you're a higher rate of tax payer I believe you save more (just the people who have less need to watch all their pennies). On basic rate if you want to only be tied up for one year you don't save much. I nearly went for it. Got made redundant in less than a year so glad I didn't would have been a tricky thing to sort out as the company b went bust at the same.time.

    Do you want to be tied in for 1 to 4 years? If not buy a discounted last year bike and from a shop offering interest free loans for 6 months to 3 years. There's a few b out there. You own it from the beginning. Easier to sort , not tied to your employer and you can don't have a spending limit. Assuming your employer is not registered with fsa for loans and can pay out more than 1k
  • BigLightsBigLights Posts: 464
    Correct - you will almost certainly not get any discount off RRP in any Cyclescheme shop. The shops get nailed by these guys, and have to pay a substantial percentage to them, so it destroys their margins and gives no leeway for discount. That's what I was told, anyway.
  • apkentapkent Posts: 1
    I really looked into it but, I think, unless you are seriously determined to get a particularly expensive bike and are entirely sure you will still want it in 3/4 years time, the savings are minimal.

    I went into Giant and was quoted on their cheapest 'Defy' road model @ £500. Plus accessories etc. grand total £630ish.

    I worked out that in the best case (a 3% payment after 12 months) you'd pay around £500. In the worst case around £580 (figures from memory so likely a small amount of error in there!).

    Shopping around you could easily save £50, if not £100 by mixing and matching gear from different stores.
  • mrkev83mrkev83 Posts: 184
    It worked for me cos I didn't have a grand to she'll out on a road bike and don't think I ever will
    http://www.strava.com/athletes/mrkev83

    Built for comfort... Not for speed
  • SquawkSquawk Posts: 132
    You're only really tied in for 1 year. At the end of the year most of the schemes offer an extension to the 4 year mark, but the reality is that you pay the 3% (or 7%) end of term charge as a deposit at the start of the term which they will keep at the end (ie, after the first full year has elapsed). You forget about it, the bike is yours.

    At the end of those four years I think you have the option to give them the bike in return for you 3 or 7% fee, but in reality I suspect I won't even have the same email address to know they contacted me. I reckon it saved me a couple of hundred quid all told, worth it if you're with the same company, but if moving on is a real possibility in the next 12 months I suspect more hassle than it's worth.
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