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Real cost of Cycle to Work?

copperthorpecopperthorpe Posts: 82
edited August 2015 in Commuting general
Hello there,

looking to give Cycle to Work a go but would like to know how to work out how much per month the scheme will cost me
ie: is there an easy way to work out how much I will down in my 'take home' pay as I cant find a straight answer to this anywhere
Will proably spend around £500.....


Thanks.
C49

Posts

  • kajjalkajjal Posts: 3,380
    It depends on pension contributions, tax rates, taxable benefits, various tax allowances etc. but a very rough guide is to deduct the repayments from your salary before tax and then put the new figure into a salary calculator which will change it into take home pay. Then compare this number to what you get currently.

    Just be careful to only use this as a very rough guide unless you work it out in detail.
  • whoofwhoof Posts: 756
    Doesn't this do it?

    http://www.cyclescheme.co.uk/calculator

    Just tried it, put in my tax code, cost of the bike and salary and it gave a 'Net salary sacrifice, based on 12 month hire period' i.e how much I would pay a month. I ignored the bit about weekly commute costs.
  • thanks folks.....used both replies and found what I needed.
    C49
  • The RookieThe Rookie Posts: 27,757
    Just remember that that is for the one years hire, you then have to resolve how you 'buy' the bike at the end of the year.
  • Just remember that that is for the one years hire, you then have to resolve how you 'buy' the bike at the end of the year.

    Yes, and the provider won't tell you up front what that final payment will be.
    Was a deal breaker for me and I went down the route of finding a good value bike and using an interest free credit card route instead, knowing I'd own my bike immediately and have predictable repayment period and amount. Also, it meant I didn't have to wait for my benefit window to open in December before applying for my voucher...
  • The RookieThe Rookie Posts: 27,757
    The provider CAN'T tell you in advance, it contravenes the rules of the scheme.

    The scheme needs changing to just make it an HP agreement as the rules used to be 'interpreted'.
  • bigmonkabigmonka Posts: 361
    I think that the mystique around what happens at the end of the scheme isn't as much as it used to be. Check out the FAQs on the cyclescheme website (or whichever provider you will be using): http://www.cyclescheme.co.uk/help/faqs/end-of-hire
    From the above link:
    If Cyclescheme is handling your end of hire options you will be given the following 3 options at the end of you hire period:
    • Under a separate agreement with Cyclescheme, pay a small refundable deposit (3% or 7% of the certificate value*) and continue to use the equipment for 3 years. The monthly payments during the Extended Use Agreement are zero. At the end of this period, Cyclescheme refunds the deposit if you do not wish to keep the Package. No further action or payment is required if you wish to keep the equipment.
    • Take ownership of the equipment by paying Cyclescheme the market value (e.g., for a one year old Package this would be 18% or 25%* of the Certificate value in accordance with HMRC requirements).
    • Return the equipment to Cyclescheme
  • mrtukmrtuk Posts: 75
    I think that the mystique around what happens at the end of the scheme isn't as much as it used to be. Check out the FAQs on the cyclescheme website (or whichever provider you will be using): http://www.cyclescheme.co.uk/help/faqs/end-of-hire
    From the above link:
    If Cyclescheme is handling your end of hire options you will be given the following 3 options at the end of you hire period:
    • Under a separate agreement with Cyclescheme, pay a small refundable deposit (3% or 7% of the certificate value*) and continue to use the equipment for 3 years. The monthly payments during the Extended Use Agreement are zero. At the end of this period, Cyclescheme refunds the deposit if you do not wish to keep the Package. No further action or payment is required if you wish to keep the equipment.
    • Take ownership of the equipment by paying Cyclescheme the market value (e.g., for a one year old Package this would be 18% or 25%* of the Certificate value in accordance with HMRC requirements).
    • Return the equipment to Cyclescheme

    Interesting ... I hired through cyclescheme, and don't recall doing anything after the initial hire period ... concern now is whether I actually own the bike :shock:
  • bigmonkabigmonka Posts: 361
    I think that the mystique around what happens at the end of the scheme isn't as much as it used to be. Check out the FAQs on the cyclescheme website (or whichever provider you will be using): http://www.cyclescheme.co.uk/help/faqs/end-of-hire
    From the above link:
    If Cyclescheme is handling your end of hire options you will be given the following 3 options at the end of you hire period:
    • Under a separate agreement with Cyclescheme, pay a small refundable deposit (3% or 7% of the certificate value*) and continue to use the equipment for 3 years. The monthly payments during the Extended Use Agreement are zero. At the end of this period, Cyclescheme refunds the deposit if you do not wish to keep the Package. No further action or payment is required if you wish to keep the equipment.
    • Take ownership of the equipment by paying Cyclescheme the market value (e.g., for a one year old Package this would be 18% or 25%* of the Certificate value in accordance with HMRC requirements).
    • Return the equipment to Cyclescheme

    Interesting ... I hired through cyclescheme, and don't recall doing anything after the initial hire period ... concern now is whether I actually own the bike :shock:
    I seem to remember there being somewhere on the cyclescheme website where you can log in and find things like your hire agreement - it should say there what state the agreement is in!
  • mrtukmrtuk Posts: 75
    I think that the mystique around what happens at the end of the scheme isn't as much as it used to be. Check out the FAQs on the cyclescheme website (or whichever provider you will be using): http://www.cyclescheme.co.uk/help/faqs/end-of-hire
    From the above link:
    If Cyclescheme is handling your end of hire options you will be given the following 3 options at the end of you hire period:
    • Under a separate agreement with Cyclescheme, pay a small refundable deposit (3% or 7% of the certificate value*) and continue to use the equipment for 3 years. The monthly payments during the Extended Use Agreement are zero. At the end of this period, Cyclescheme refunds the deposit if you do not wish to keep the Package. No further action or payment is required if you wish to keep the equipment.
    • Take ownership of the equipment by paying Cyclescheme the market value (e.g., for a one year old Package this would be 18% or 25%* of the Certificate value in accordance with HMRC requirements).
    • Return the equipment to Cyclescheme

    Interesting ... I hired through cyclescheme, and don't recall doing anything after the initial hire period ... concern now is whether I actually own the bike :shock:
    I seem to remember there being somewhere on the cyclescheme website where you can log in and find things like your hire agreement - it should say there what state the agreement is in!

    ... and indeed it does ... amazing I remembered my password ... and it says ...
    Completed
    Thanks for your payment; we're pleased to confirm that you now own your equipment.


    it mentions step 5 of my hire process was Decision time - You have 3 End of Hire options, choose wisely ... don't remember doing anything (or paying anything), but good news that I do own it now :D
  • PufftmwPufftmw Posts: 1,941
    Mine was great for myself and a colleague. Organised it through work and they forgot to take it off our salary :o Company is now no more...
  • tangled_metaltangled_metal Posts: 4,021
    I looked into it and glad I didn't go for it. Back then they were still sorting out the final value thing and some just said pay a token amount others said it is according to a certain table. Some schemes were coming into play where you effectively handed it on to the cyclescheme provider and after 3 years it had a £0 FMV (or something like that).

    Good job too as company went bust within a year so very awkward if I'd done it. The main thing for me was not owning the bike and TBH it was not much of a saving. I could buy a cheap deal bike and get 0% credit too. The schemes I could have used only allowed for full price bikes. So basically end of season sales I could get up to 50% off last year's model and own it outright with 0% credit. IMHO that is cheaper way to do it than cycle to work. One shop near me even did special deals such as bring an old bike any condition and get so much off. Basically £50 for a skip job fished from my local canal would have got that off, then add a last year's deal and 0% credit deal... I think those on higher rate of tax could of course make it more worthwhile.

    One thing though is the money is not the whole deal. Other intangibles such as whether it suits your circumstances. Do you want to be tied into a deal with your current employer? WIll you be leaving, made redundant, want a new bike within a year because you've outgrown your sub-£1k bike?
  • kajjalkajjal Posts: 3,380
    I looked into it and glad I didn't go for it. Back then they were still sorting out the final value thing and some just said pay a token amount others said it is according to a certain table. Some schemes were coming into play where you effectively handed it on to the cyclescheme provider and after 3 years it had a £0 FMV (or something like that).

    Good job too as company went bust within a year so very awkward if I'd done it. The main thing for me was not owning the bike and TBH it was not much of a saving. I could buy a cheap deal bike and get 0% credit too. The schemes I could have used only allowed for full price bikes. So basically end of season sales I could get up to 50% off last year's model and own it outright with 0% credit. IMHO that is cheaper way to do it than cycle to work. One shop near me even did special deals such as bring an old bike any condition and get so much off. Basically £50 for a skip job fished from my local canal would have got that off, then add a last year's deal and 0% credit deal... I think those on higher rate of tax could have course make it more worthwhile.

    One thing though is the money is not the whole deal. Other intangibles such as whether it suits your circumstances. Do you want to be tied into a deal with your current employer? WIll you be leaving, made redundant, want a new bike within a year because you've outgrown your sub-£1k bike?

    After checking i did the same got a sale bike on interest free credit. Better deal and not tied to employer.
  • seajaysseajays Posts: 331
    You can however save hundreds of pounds (as I did) if you have a more relaxed approach to "ownership". If you edge into higher rate tax payer bracket, you'll be saving 40%+ on the total cost of the bike, and even on standard tax rate it'll be in the 25% region.

    Where we work they just use the standard HMRC table for valuation - http://www.hmrc.gov.uk/manuals/eimanual/EIM21667a.htm

    So I have three options: Return Bike; Pay final value fee based on HMRC table; Keep using it for nothing.

    I've gone for option three. :) I have the option of paying the final value fee at any time in the future and making it mine, so no problem there.

    Am actually thinking about getting my second bike now my first year is up on the same basis...
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  • N0bodyOfTheGoatN0bodyOfTheGoat Posts: 4,867
    Blimey, so looking at a bike that cost £1k, HMRC is advising that to transfer ownership at 18 months, the employee should pay ~£203.50 (because you can take VAT off the original cost, but then add it back to the transfer of ownership fee)?

    For basic rate tax payers, do they benefit at all from the scheme these days?

    Edit: Using http://www.cyclescheme.co.uk/calculator suggests that a £1k bike gives you an overall saving of ~£16.50, if my sums are right after using HMRC's 18 months transfer of ownership!!! :lol:
    ================
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  • seajaysseajays Posts: 331
    I suppose that's the point - why bother transferring ownership when you can continue to use it for nothing for years to come (having made a 25-40+% saving)... Makes sense to me! :) Eventually it becomes yours for nothing anyway.
    Cannondale CAADX Tiagra 2017
    Revolution Courier Race Disc '14
    My Strava
  • I am on my 2nd cycle to work bike.

    First one in 2012 and I picked the second up on Wednesday.

    I spend £500, I pay £26 an month (or rather £26 off my take home pay) making it £312 over 12 months and last time it was a final payment of £40. I am guessing it will be similar this time.

    For me it was a good deal, my previous bike was very tired and it would have cost a lot to replace the transmission components and tidy it up a bit.

    I got a brand new bike and am keeping the old one as a winter/spare bike or just as spares.

    I'll do the same again in 2/3 years.
  • richkrichk Posts: 564
    Buying a £700 bike, I reckon I finally saved around £100 with c2w. Biggest benefit for me is not having to find the £700 up front.
    There is no secret ingredient...
  • corriebee1corriebee1 Posts: 390
    My work run their own scheme, where they buy the bike, rent it back to me (about £30 per month off my take home pay) and then give me the bike at the end of the 18 month term. I just pay tax on the benefit in kind, so i think it was about £80 at the end for my £1,000 Felt Z6.

    I was able to buy a sale bike as long as it was from a retailer who could provide a proper invoice. And to top it up to £1,000 with some bits (pedals and cleats etc).

    I've owned the first one for 2 1/2 years now and done 3,000 commuting miles. Thinking of starting a new c2w deal, as it's such a great saving for a higher rate tax payer.
  • The RookieThe Rookie Posts: 27,757
    Buying a £700 bike, I reckon I finally saved around £100 with c2w. Biggest benefit for me is not having to find the £700 up front.
    This, its not an 'amazing' deal but it's not bad, it is a years (almost) interest free credit, you possibly could get a similar deal by shopping around and using a 0%card, but that's a lot more hassle.

    As a 40% tax payer it would be a bigger benefit to me (erm isn't that kind of the wrong way round) than to a lower rate payer, but as I build all my own bikes there are few bikes that really appeal.
  • Just remember that that is for the one years hire, you then have to resolve how you 'buy' the bike at the end of the year.

    So if the bike got stolen or destroyed, would you still be liable for payments? Im assuming you would. The whole scheme sounds farcical to me. I heard its not even that much of a saving all things considered. I would rather spend more and get things sorted strait away.
  • seajaysseajays Posts: 331
    Just remember that that is for the one years hire, you then have to resolve how you 'buy' the bike at the end of the year.

    So if the bike got stolen or destroyed, would you still be liable for payments? Im assuming you would. The whole scheme sounds farcical to me. I heard its not even that much of a saving all things considered. I would rather spend more and get things sorted strait away.

    ...I don't know of any way of buying a bike that means you don't have to still pay for it if it's lost or stolen!? You can of course pay for insurance if you wish!

    I saved almost £400 on £800 worth of bike and equipment. To me that's a substantial saving! I'm past the end of the 12 months now, and I pay nothing to keep riding it as long as I want (that does depend on how your scheme/employer works of course). If at some point I want to make it mine I just calculate the residual value at that point using the HMRC tables and pay that and it's mine.

    All good to me. :D
    Cannondale CAADX Tiagra 2017
    Revolution Courier Race Disc '14
    My Strava
  • The real cost to me from the Halfords Cycle to Work Scheme. "Stress" please read the below e-mail sent to Halfords CEO:

    I would like to tell you my little story. It all starts with signing up to the Cycle2work scheme via my employers and taking proud ownership of a Chris Boardman Team CX bike mid-October 2014.

    The Halfords branch in question was Burgess Hill, the staff were so helpful in bike suggestions as I commute 5 days a week from Haywards Heath to Brighton over Ditchling Beacon (approx. 900ft climbing each way, so almost 2000 feet a day.) round trip daily of 35 miles.

    Now this is a tough ride for a fat 40+ year old so bike choice and set up were essential, as this is an all year, come rain or shine commute. All started so well first couple of weeks the only issues were to be frank my lack of fitness.

    Then the problems started first of the brakes failed and gears would not work, not unusual as the cables had stretched (New bike syndrome) all sorted with expert speed and attention to detail at the 6 weeks free health check carried out by the mechanic Ben at your Burgess Hill branch.

    However as the winter progressed I had more and more issues from again gears and brakes would stop working after two weeks, the headset would go lose and cause vibration on braking and creaking on climbs. Closely followed by the bottom bracket barring failing and this was just month 2 of ownership.

    So by month 4 (February), I’m now a regular at the Burgess Hill branch and on fist name terms with many of your staff. The Bike hut manager Lee is to be highly commended for his patience and customer service skills.

    In February the decision of your area manager (sorry don’t have his name) was to condemn the bike un road worthy. Faults both front and back brakes not working, gears not working, both front back wheel bearings gone, 2nd bottom bracket needing replacement and paint flaking off of the frame.

    So after just 4 months my pride and joy condemned. So in the 4 months of ownership the bike was in and out of your workshop for a total of 3 weeks.

    Not to worry in just under a week I was back on the road with another brand new Chris Boardman Team CX personally set up by the manager of Burgess Hill Bike Hut Lee. So all good in the world of cycling. All smiles.

    6 week check booked in for bike number 2, bike cycled to Halfords Burgess Hill just for a few adjustments (New bike syndrome), and me looking forward to the spring sunshine and lighter nights commuting home.

    Until I get a call from Lee, on his thorough check over he discovered the frame had cracked at the seat post. So thank god for warranty.

    With Lee’s good advice and opinion a decision was made to go for a replacement bike, but a different make (Raleigh Revenio 2) All is good in the world again, it flew through its six week check with just minor (New bike syndrome) adjustments. But come week 10 guess what? again I’m without a bike to cycle to work. So for the last three weeks I have been riding a £250 ebay bike as the bottom bracket has failed on my 10 week old bike and no branch of Halfords or any local bike shop including Evans cycles head office can get hold of the correct removal tool.

    I have been informed by Ben at Burgess Hill branch that they can’t get this tool in stock till September the 5th that’s over a month away already been without this bike 3 weeks and its 10 weeks old, question are all your bikes made of cheese?

    Good news I have managed to get the correct tool sent direct from a bike shop in Germany

    As no one has it in stock in the whole of Britain, so come the weekend the Raleigh and me with tools will be on my way back too…. I hear you ask my favourite shop Halfords in Burgess Hill.

    Too say I’m highly disappointed with the quality of the 3 bikes I have had in the last 8 months I would however like to complement you and the Staff of the Burgess Hill branch, with a special thanks to both Lee the manager and Ben the mechanic for their understanding, help and support over the past half year. They are to be highly commended and I am so fully appreciative of their time and help.

  • tangled_metaltangled_metal Posts: 4,021
    Back a few years my employer got a load of leaflets dropped or posted from the local council on the scheme. Nice tri-fold A4 or A5 printed leaflets. They passed them around the office because one of the managers was interested but had just bought a new mountain bike. I expressed interest and got the MD to agree that I could take part if I wanted to. That meant they had to open it up to all so these leaflets got passed around the company. Since there were a lot of Polish workers who had no interest in losing any money from their pay packets it was only me into it (although the MD nearly got interested).

    I looked into it and at that time a lot was being made about FMV (Fair Market Value) and being on the lower rate of tax I felt the risk was not worth it to save a very little bit of money. My thinking was I would not go into this scheme for any bike value that I could not afford to buy outright for myself, thinking was that way I could buy out of the scheme if I left the company. It was a time of low job security with the company over expanding and really lurching to oblivion.

    I never took it up and less than a year later was made redundant when the bank closed the company down (before a debt shedding pre-pack could be set up fully). I would have then been in a situation where I could not justify paying off the scheme over paying my mortgage so I would have lost all the rental value put into the scheme.

    I only say this because IMHO it is always a risk, not least because it is not your asset. Buying on an interest free scheme at a bike shop, each payment gets closer to clearing the debt and full ownership. Even before then you reach a point where the market value would clear the debt and perhaps give you something back. Leaving a C2W scheme in the middle you have no assets held in the bike it is buy back or give it up. In my case it would have been give it up.

    I am not saying it is universally a good or bad thing, there is no way to say this. What I am saying is this scheme has benefits and drawbacks. You have to look as much at your security in the company as much as the financials. I guess in public sector it could be safer than in private sector and a smaller company might be riskier than a larger one. This is risk management and one that you need to consider. I did and made the right decision not to take it up. I stuck with the old bike I had and when in my new job I bought a new bike outright in the September sales saving about 40% off RRP (I was on lower tax rate so you could say that I got it cheaper than a C2W scheme would manage for me).

    PS some schemes allow sales bikes most do not I believe so I would have had to take up a scheme for £700 when the actual bike in the sales cost £420 for the scheme available.
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