cyclescheme.co.uk - end of the hire period

springtide9

Hi there,

My cyclescheme bike is coming to the end of it's hire period and I need to make a decision on what to do...

Looking at:
http://www.cyclescheme.co.uk/employers/employer-faqs

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.

The obvious (and recommended) choice is to pay the 7% to extend the period for an extra 36 months.. but what worries me is:

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.

I just don't like the wording "may at its discretion"... is this worded for HMRC?

This flowchart implies "it's a given" you get to keep the bike (for the 7% deposit)
http://www.cyclescheme.co.uk/employers/ ... mrc-update

Anyone been through this process to confirm?

meanredspider

I've just finished the extended period to avoid being screwed by HMRC changing the valuation rules after I'd signed up many, many years ago. There's no way Cyclescheme wants to be saddled with loads of old bikes so I'm sure the discretion bit is either a tax rule or a get-out clause. I have no doubt you'll get the bike at the end of it.

Phil_D

At the end of year 1, you pay a deposit of 7% to use the bike for a further three years for free. Then, at the end of the three years, four years has passed. At that point the bike is worth 7% of its original value (as per the HMRC valuation table). You have already paid that 7% so the bike is yours. The "discretion" bit is to satisfy legislation about them not being obliged to let you have the bike.

I asked Cyclescheme about a year ago when I was looking into it and was told pretty much what Meanredspider says. It's not cost effective for them not to offer ownership.

kentphil

My cyclescheme hire period recently ended and I went for the extended 36 month option paying around £40 to do this. The alternative was to pay £200+ to completely end the agreement.

I think the discretion clause is something to do with it being a loan agreement or for tax reasons, as previously said.

Stevie-eff

What are peoples thoughts on selling bikes that are under the 3 year extended hire period? Is it safe to do so?

Unofficially obviously

alex222

I would sell it.

bmxboy10

The best scheme is the Evans scheme as the transfer fee is 1p. I had the conversation with Evans and they said they never check at the end of the extended period to see if the person still has the bike. I think you could sell the bike but would be worried about doing this I have to say.

dugliss

You can always say it`s been robbed if they ask for it back