Cycle to work scheme

joey54321
joey54321 Posts: 1,297
edited November 2017 in Road buying advice
I am looking into using the cycle to work scheme for a new bike purchase of a bike costing ~£1000 (I have been told I can top it up over the 1k mark if needed).

However, when I use the online calculator it looks like I'm only saving £70 (image of screenshot of the calculated price)

https://imgur.com/a/Phwp2


This doesn't seem to make any sense to me, is it really only worth £70?

Comments

  • grenw
    grenw Posts: 804
    The image posted assumes that you buy the bike after year 1. Remember you are not buying the bike with your monthly payment, simply leasing it. When (if) you buy it, the taxman insists that you do so at market rate - hence 25% of retail price after a year - the 'ownership fee'.

    A lot of schemes allow you to defer this purchase for another 3 years for an admin fee - mine was £70. After 3 years the bike is worth very little so you get it free.
  • joey54321
    joey54321 Posts: 1,297
    Ok, so if I put in 4 years, am I paying a monthly salary sacrifice for all 4 years or do I just pay for the first year?
  • cooldad
    cooldad Posts: 32,599
    Just the first year. Figures really depend on your marginal tax rate. You save a lot more at 40% than 25%.
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  • joey54321
    joey54321 Posts: 1,297
    Unfortunately, I am 25% tax rate payer. If I put in to the scheme 4 years it does come down a lot to £750 so not a bad saving I guess.
  • Gouldy-89
    Gouldy-89 Posts: 49
    If you discuss with your employer, there is the option for them to give the bike to you as a work benefit. This way you only have to pay tax on the on the 25%, making the saving much bigger.
  • rowanharley
    rowanharley Posts: 76
    Also, don't forget that rather than having to fork out £1k, you pay it over 12 months, giving you time to save up all the money you needed

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