Cycle to work scheme – employer wants money up front

Our employer has a new FD who wants to change the rules of our scheme as she feels that the risk of unpaid loans if a person leaves is to great and has proposed that all salary sacrifice payments are made up front before the cycle is loaned (purchased) with a maximum 3month period

Is this allowed ?

The bike remains the property of the employer for the period of the ‘loan’. If someone were to leave without finishing the payments they are obliged to pay the remaining amount.

What happens if an employee leaves their job or is made redundant?

Once signed, the Hire Agreement is non-cancellable following a cooling-off period of 14 calendar days following collection/receipt of the equipment. This means that if an employee leaves or is made redundant from their employment during the hire period they are obliged to pay the remaining salary sacrifice amount in full from net pay i.e. without any tax exemptions.

If applicable, the employee may then be offered ownership of the equipment in the normal way (please refer to ‘What happens at the end of the hire period?’ above).

Wouldn’t have thought so as the tax savings are made per month and is a deal between you and the scheme administered through work. If she gets the money upfront then the company will personally benefit through having your cash in their bank. Can’t imagine the Inland Revenue would be very happy.

She knows that money can be legally recovered from the employee if they leave but if the final salary deduction is not enough then the she believes the administration effort to recover cost or the cycle is to great

Chestrockwell- interesting point but would the company be deemed to be benefiting if an agreement is in place ?

Any other suggestions that I can give the FD to limit her risk ?

She also want to only make it available to employee that have been with the company over a year, Im sure that is not possible

Sounds like she just doesn’t want to do the scheme full stop and is trying to find any bullshit reason not to. It works for 1000s of companies all over the country, why would yours be any different.

Tell her to focus on improving employee retention rather than being so petty about cycle to work.

Or start worrying about the redundancies she’s got lined up.

Chestrockwell- interesting point but would the company be deemed to be benefiting if an agreement is in place ?

Well they would be making profit on tax savings that have not yet been made I think so wouldn’t have thought that would be allowed and as mentioned I believe they are simply the administrators of a deal between you and the scheme so have no right to be involved other then through payroll.

Saying all that, I’m no expert so will happily stand corrected.

Yes she is just awkward/fat/on a power trip

That said we still need to convince her to keep the scheme going in some form

Anyone one know of any stats on how many companies participate ?

Just for clarity the current scheme is run in-house by HR

HR need to tell her to move the tanks off their lawn.

Ask her to work out how it will affect the employers NI contributions if she stops the scheme. Think there will be a cost there as employer now responsible due to higher taxable salaries

As others have stated – scheme is only administered by the co. If she’s gonna hold £150 quid as a deposit for every person in the scheme then she’d be making interest on this. Let her do it and then report her

Is there any union representation in the workplace?

Might be good to have an official representative tell her she’s being silly.

They have to put up with the cost of recovering the old debt if someone leaves, they can’t demand payment up front. She’d be better off knocking it on the head. Although I don’t see why it would be an issue as given the scheme maxes out at £1000 the chances of anybody earning less in their final pay packet than the outstanding debt would be fairly slim, part timers excepted.

I’d agree with a minimum time period though, I’d say minimum 1 year or at least until off probation. Would be bad business sense to just start chucking benefits around to people who are unproven.

Bum her dog. That’ll show her your not be mest with.

Is your scheme limited to £1000?

Surely they can just deduct any outstanding dept from the final pay packet

Our employer has a new FD who wants to change the rules of our scheme as she feels that the risk of unpaid loans if a person leaves is to great

It is not a loan!

She knows that money can be legally recovered from the employee if they leave but if the final salary deduction is not enough then the she believes the administration effort to recover cost or the cycle is to great

assuming £1000 limit and staff are full time employees above the minimum wage (as required to make the scheme legal) then I find that hard to imagine. She’s an FD she should be able to work out her level of exposure here – I think your company has some cash flow difficulties – and or is planning some major job losses and she’s not being upfront.

Or does she have a very large number of zero hours / casual staff etc? I can see how it could be an issue if you ran a restraunt or bar with lots of staff only working a few nights a week.

and as mentioned I believe they are simply the administrators of a deal between you and the scheme so have no right to be involved other then through payroll.

actually thats back to front! The deal is between the employer and employee, and “scheme” is only there to facilitate admin. There is no need to use one of the formal schemes at all, and that then introduces various flexibilities that you can’t normally get.

She also want to only make it available to employee that have been with the company over a year, Im sure that is not possible

it has to be open to ALL employees. However we operate a policy where ALL company benefits (pension, sick pay, etc) are only open to people who have passed probation – we’ve never had to consider if that meant bike to work or not.

That said we still need to convince her to keep the scheme going in some form

13.8% Employers NI saved on all sacrificed salaries.

For balance – if you paid for the bike up front then the employer wouldn’t be “holding on” to that money as they have to pay for the bike.

Where rental payments are made via salary sacrifice, there is a cashflow hit to the employer as they pay for the bike in full up front and only then recover that cost over (usually) 12 months.

Obviously there is a NI saving to the employer, plus all the advantages of having a healthy/engaged/motivated workforce etc. But I can’t understand why you’d feel that an employer was “holding on to” or benefiting from your money if you paid up front given the cost of purchasing the bike.

Sandwicheater, you should be in politics.

To put it politely our FD is more than a little eccentric, and we’ve got the C2W scheme, but we have quite a strong/switched on HR lady.

We have to have been working for the company for a yea, otherwise AFAIK everyone can get a bike (although I’m not sure how it works with the 1st year apprentices, being on their low wage).

Arrange a meeting with her & HR, & present your case.
Assuming the current scheme has run ok, use that as an example.
If you go in there knowing all the ins & outs, & put across a well thought out case they will likely just let the scheme run. If it’s the admin side of things then suggest a third party scheme, but talk up it’s benefits.

We run it in house…not capped either 🙂
You have to be with the company a year and the payments are spread over 24 months.
Great system. I have had three bikes on the scheme over the last 10 years.

tomhoward – Member
Sounds like she just doesn’t want to do the scheme full stop and is trying to find any bullshit reason not to. It works for 1000s of companies all over the country, why would yours be any different.

POSTED 3 HOURS AGO # REPORT-POST
Mine won’t even entertain offering it to us(300+employees on site) 🙄
At this weeks monthly works committee meeting it was announced that they are considering banning cyclists from the site! We will have to leave cycles at works entrance and walk the 1/2ml to plants!! Reason for this is a colleague fell off on an untreated icy site road and was off work for some time which becomes a worldwide company statistic which doesn’t go down too well with our bosses(loss of certain bonuses at year end review etc). Said colleague for whatever reason has filed a compo claim.
Apparently it is not normal company policy to allow vehicles to park within site boundaries at other company sites(global company)and our management are probably going through the motions to pacify those above them, announcement coincided with board member visit. 😐

chakaping – Member
Is there any union representation in the workplace?

🙁 😥 👿

I haven’t read the rules recently but I thought for tax purposes it had to legally be over at least 12 months.

I don’t think she understands how the scheme works and I doubt your company could hold money upfront fir tax reasons. At our place if you leave it comes out your final pay.

“a colleague fell offwhilst walking on an untreated icy site road”

Same difference.

Is there any union representation in the workplace?

No, unfortunately not, we have 27 office in the UK with 1000 employees

They have to put up with the cost of recovering the old debt if someone leaves, they can’t demand payment up front. She’d be better off knocking it on the head. Although I don’t see why it would be an issue as given the scheme maxes out at £1000 the chances of anybody earning less in their final pay packet than the outstanding debt would be fairly slim, part timers excepted

looks as though she will not accept any risk no matter how small so yes i fear it may be cancelled, in which case id go with money upfront rather than nothing

I’d agree with a minimum time period though, I’d say minimum 1 year or at least until off probation. Would be bad business sense to just start chucking benefits around to people who are unproven.

can you do this though ?

HMRC LINK
Examples of exclusions from cycle provision that would prevent the exemption from applying include the following:

Exclusion of temporary employees (except for where periods of employment are very short or casual as outlined above)
Exclusion of employees simply because they are in their probationary period

Bum her dog. That’ll show her your not be mest with.

before or after i kick her in the fanny ?

Is your scheme limited to £1000?

Surely they can just deduct any outstanding dept from the final pay packet
no its open to any amount, any retailer

it was suggested that we limit the amount to the available final salary, im not sure if this effects the availability clause ?

It is not a loan!

bad choice of words, hire charge ?

I think your company has some cash flow difficulties – and or is planning some major job losses and she’s not being upfront.
Or does she have a very large number of zero hours / casual staff etc? I can see how it could be an issue if you ran a restraunt or bar with lots of staff only working a few nights a week.

certainly no cashflow issues, id be 99% certain that we have no organisational changes pending, we do have a lot of PAYE contractors though many have been with us for long periods

For balance – if you paid for the bike up front then the employer wouldn’t be “holding on” to that money as they have to pay for the bike.

Where rental payments are made via salary sacrifice, there is a cashflow hit to the employer as they pay for the bike in full up front and only then recover that cost over (usually) 12 months.

Obviously there is a NI saving to the employer, plus all the advantages of having a healthy/engaged/motivated workforce etc. But I can’t understand why you’d feel that an employer was “holding on to” or benefiting from your money if you paid up front given the cost of purchasing the bike.

whether the employer is benefiting from holding payments seems to split opinions on here does anyone have any firm evidence one way or the other ?

I haven’t read the rules recently but I thought for tax purposes it had to legally be over at least 12 months.

i thought it could be any duration any cost ?

i thought it could be any duration any cost ?

to answer my own question, yes it can any duration and any cost……

‘There is no limit on the total value of the equipment including the cycle’

‘There is no fixed time period for which cycles and cyclists’ safety equipment must be loaned under a Cycle to Work scheme’

bump 🙂

are contractors eligible to join an employers C2W scheme?

surely it goes against the rules of being a contractor

are contractors eligible to join an employers C2W scheme?

surely it goes against the rules of being a contractor

We have two types of contractors, limited company and PAYE my understanding is that the PAYE contractors are eligible. im sure the scheme is open to those that the company makes NI contributions ?

Looks like the group consumer credit licence is no more and most companies are no longer restricted to £1000

tbh If the company (for whatever reason) doesn’t want to offer the C2W scheme, then it doesn’t have to.

And personally, I’d avoid antagonising the FD over such a (non-business) matter.

to bring the thread to conclusion ….

compromised reached
25% deposit taken upfront from net pay (to cover damage/loss of the equipment)
75% of the purchace price taken as Salary sacrifice rental
maximum of 6months hire

at the end of the hire, either

the equipment will be returned and the company will refund the deposit
the equipment will be sold at FMV (25%)*

* if the sale is to the person who made the deposit then the FMV fee will be deemed as already paid and no deposit refunded

so savings have been reduced from 42% to 31.5% but you do own the bike at the end

I’d tell her to shove it and buy at 0% instead from somewhere.

HMRC Guide

one of the keys aims of the ‘Cycle To Work Scheme’ is to encourage cycling by avoiding the large upfront costs associated with buying a bike or cycle equipment as this can be a deterrent for people wanting to start cycling to work