matthewmountain... they are being a little naughty as they are only supposed to go upto the limit of the voucher that you receive.
The way the scheme is supposed to work is that the employer buys the bike, you then rent the bike off them for the agreed period. Theoretically, at the end of the period they don't have to let you have the bike, the employer could keep it if they wanted to or sell it, you are not automatically entitled to it. Obviously, the employers aren't likely to do this as they'd end up with a lot of bikes they wouldn't know what to do with!
There are one other main problems with paying extra, on top of the voucher, and that is by owning part of the bike you are technically changing the agreement from a pure hire agreement, which gets all the tax relief, to a hire-purchase type agreement, which doesn't. So if the HMRC come knocking, you might be in trouble there...
Also, I think there might be issues with insurance etc, as the bike shop will have to be cheeky with the receipts to comply with the rules, and you'd only be able to claim back upto the £1k if it all goes pear-shaped...
It is possible to get a voucher over the £1k mark however, but that involves you not using one of the of the peg schemes from Cyclewise, Evans, Halfords etc, and persuading your company to do the paperwork and also apply for a credit license themselves. In that case you can go up to about £3k I believe...
