Looking at the cycle to work scheme for myself, and wondering whether anyone else has topped up the total to more than the typical £1000 value in order to get a better spec bike. I know I wouldn't get the tax benefits of the extra amount, but has anyone done it, and how did it work ?

We had loads of people do it, you get the voucher for the £1000, you pay the rest of the balance as you wish at the point of purchase. Very straightforward!

The bike shop will need to put the value of the bike as £1000 on the quote form, but obviously you will get a proper receipt showing the actual value of the bike for insurance or whatever.

Some shops will allow you to top up with your own money over the £1000 limit although they are not supposed to. Most of the big shops won't allow this though. Keep it in mind as well that if you do find a shop that will allow you to top up over the £1000 that the bike won't be insured for the full amount, the bike will only be insured for the £1000. So in the event of a damaged/stolen bike, you'll take the hit. I know this as the shop i work for allowed this to happen last year. The bike was stolen. Customer only insured for £1000 and he had to pay a £250 excess, so he lost out pretty badly.

Some companies can get the limit upped to more than £1000 but they need to apply for a credit licence agreement to do this. This costs the employer so most are not willing to do it.

Hope this helps some.

although they are not supposed to

Says who? Cyclescheme don't have a problem with it!

Of course the bike can be insured for the full amount, it's only the voucher which will say £1000, the bike shop should provide you with a receipt for the true value of the bike. If you only insure it for £1000, knowing you paid more, then you're a bit of a moron!

Cyclescheme have sent letters and emails out asking shops to refrain from this practice.

As the customer doesn't actually own the bike (not until it's fully paid for), the employer does, this can cause problems with the insurance.

Ah well, must've been since I got a proper job and left the bike shop! We still do it, and I know Evans do on their own scheme.

Yep, I topped mine up at the local Halfords. He also let me put the free 15% voucher I get "for accesories" to the bike as well.

thanks folks, thats good to know. I wouldn't be going waaay over, but there are a few bikes which i reckon would be worth spending a little bit more to get over the £1000 mark.

I'll get in touch with the shop sometime soon.

this can cause problems with the insurance.

How?

The cyclescheme should be irrelevant to the insurance policy. The insured value should be the value of the item.

On the flipside, you could buy a bike on credit and end up paying more than the RRP through the interest, but you wouldn't insure the bike for the retail price + the interest on the credit terms.

Yes – I did exactly that last year. I paid the shop directly for the amount over £1000. I got the impression that strictly speaking they weren't allowed to do it, but did anyway.

Note that cyclescheme take their cut of the voucher value, so most shops exclude some of their discounting on bike to work purchases.

Its a tax thing apparently. The tax loophole is that you are hiring the bike from your employer (not buying it in installments). Hiring done this way gets tax relief (buying it doesn't). if you put extra money to it then it becomes a purchase, also if you agree a final purchase price with your employer then strictly speaking thats outsidet he scheme as well.
My local store (JE James) told me last week that they had been told not to accept people paying over the £1k limit.

Oh well – Any one know of a stockist of Santa Sruz that would be up for me topping up to a £3.5K Nomad?

I have done this (£1100) and strictly speaking it shouldn't have been allowed. I think it is down to the tax & the fact that your employer owns the bike and you lease it off them for the year.

a mate managed it at Rutland cycles, and got a £3k Lapierre Spicy!!! That's just taking the pi55!!

It may seem a good idea to you to try and scam the scheme like this. However the whole scheme is under deep scrutiny by the HMRC and DoT at the moment, the more they find out about shops/cycle to work schemes bending the rules the more likely they are to pull the whole thing all together (remember computers for work?)
If your company find out you have topped the voucher up then you can get in to trouble with them for this and end up paying the full cost of the bike.
If the scheme changes in the future then it is down to people like you and bike shops who allow top ups

Houns is right – the system is getting massively abused I would expect some more severe restrictions to be coming along. For those that remember there used to also be a similar scheme to purchase home computers that the government canned.

My guess would be that they will put a restriction on how often you can take advantage of this scheme. To be honest £1k per year on new bikes is a bit generous. (I'm severely tempted to buy bike number 4 just because it's such a good deal)

thirded houns.

It's not allowed for two reasons. You are supposed to be hiring the bike, if you then purchase part of the bike, it becomes a purchase and is then not eligible for the tax benefit.
The second reason is that it creates a confusion over ownership. The company owns the bike. if you top up, you then effectively own part of the bike, a situation most employers are uncomfortable with as it creates problems should you leave employment etc.

Not only computers for schools – Childcare vouchers are being phased out too, meaning the Cycle to Work scheme is the only real salary sacrifice scheme out there now.

Best not see that one go eh?

not sensible chat on a public internet forum perhaps…….

Mine came to £1500 but was all legit as my employer had the extended credit agreement in place to allow this and so the whole £1500 qualified for tax relief etc. So wasn't a "top up" as such, £1500 was our max limit.

I fail to see how "topping up" is abusing the system. The £1,000 limit (an my comapnies' use of Halfords) stopped me taking part in the scheme up to now. To satisfy myself this year I checked all the background info – and could find nothing about not topping up (except in implementers rules – eg HAlfords)

There is no tax scam here – you have paid income tax on the earnings for the top up….

The thing about ownership is a bit of a red herring anyway – I got a bike on the scheme for £1k, but upgraded bits on it during the hire period. So who owned the upgrades?

Our company set itself up with a credit licence. The shop got the £1k voucher, we got the bikes we wanted. Ranging from a £2.7k Orange 5 for me to others that paid over £4k.

Simples and legals..

I was told by my employer for it to be more than £1k they would need to take out additional insurance (at their expense) which they were not willing to do.

The abuse I'm talking about is the allowance is supposed to be for encouraging people to cycle to work. So really it should be restricted to a lower value and to specific types of bikes imo and over a longer time period.

I could be wrong but I strongly doubt the guys buying £3k AM bikes on the schemes are actually using them to commute. They will be commuting on their £500 commuter bikes…..

I expect to be flamed for saying that, I also think as a tax break we should all be making the most of it, as I can't believe it will last much longer in it's present generous form.

Cycle to Work Guarantee

Launched today.

interesting….

Agree with DT 78, at the end of the day it's a cycle to work scheme, and therefore £1000 is appropriate for this – as a retailer I'd love to sell top end bikes on the scheme, but that's not what it's for…

I spent quite a while the other day explaining this to a chap in the finance sector, and why he couldn't buy a top end tri bike on the scheme.

p.s. public forums not the best place to go on about scheme fiddling!

I thought the company owned the bike for the duration of the scheme? How can this be if you top up the amount? If they decide not to sell it back then is it tough luck or do you get the wheels?

rkk01… it's because you are not buying the bike. You are choosing a bike that you are then going to hire from your employer for a year at a set rate. At the end of this period the employer can then decide to sell you the bike at a 'fair market value', but they can also decide to keep the bike and sell it themselves, or do whatever they want with it.

It is only in this manner which you qualify for the tax exemption. If you pay for any part of the bike then you are no longer purely hiring the bike, and then it becomes a hire-purchase scheme which is not tax exempt.

Of course, in general no employer is going to want to keep all the bikes, and so you'd be very unlikely not to be offered the bike at the end of the year, but it's in no way guarenteed.

Quite what happens with accessories I am not sure though… are you just hiring the shoes and clothes you buy as well?

I thought the company owned the bike for the duration of the scheme? How can this be if you top up the amount? If they decide not to sell it back then is it tough luck or do you get the wheels?

I'd assume that is at the users risk… ie, it could cost you dearly, but the chances of it happening are low (what use would a used bike be to an employer??)…. and really no difference to being made redundant during the scheme – you have to pay the remaining balance: it's a risk you sign up to.

Regarding value – yes £1k is a perfectly reasonable scheme value to get the relief on. Personally I would want a better bike for commuting (and have used for many years, outside of C2W). My commute is 28 miles per day, approx 50% off-road and with 2 x 1000' climbs. I don't want to do that on a Halfords commuter, which is the very reason I haven't signed up for C2W in the past.

at the end of the day it's a cycle to work scheme, and therefore £1000 is appropriate for this

I spend far more time riding a bike for commuting than any other form of cycling so makes sense to do it on really nice bikes.

I spend far more time riding a bike for commuting than any other form of cycling so makes sense to do it on really nice bikes.

Fair enough, but a £1k bike will still be plenty of bike to manage a regular commute in comfort and also be reliable. The scheme has to work for the masses – it's designed to get people on bikes who wouldn't normally do it.

Is there anything in the actual scheme to prevent this? Or has it been placed as a restrictive measure by the third party companies profiting from the scheme?

I don't believe the scheme has an actual limit of £1k. As I mentioned above my employer stated the reason for the £1k limit was that above that amount they would have to get out some extra insurance which would cost them and they didn't want to pay it. Of course this could be wrong or an excuse to shush me up but I have no reason to believe otherwise.

Re swapping components, I also asked about this and was told to keep the original components just in case. That way if they decide to keep the bike (they didn't btw) I could have put it back to standard pretty quicky / easily.

I always wondered about how the 'hire' of accessories worked too…who'd want my year old padded cycling shorts !

Oh and don't forget they charge a 'fair' market value at the end. Mine was another 5%

I wish they'd scrap the scheme and just remove VAT from bikes

Our company only go through Halfords, I tried this and was given a definite NO (Edinburgh Straiton), I know a few others have been given the same answer – seems a bit gash when other Halfords will do it.

I think some of the rules come from the third party providers, based on their interpretation of th Govt requirements.

Halfords are a definate NO on topping up – but then it would be: most of their range fits well within a £1k limit…

Surely the scheme specifically does allow topping up?? I believe that there is a specific clause that allows topping up if the Company has a Consumer Credit Act licence, and chooses to offer the hirer an amount over £1k as an interest free loan – although I'm fairly sure that the tax relief element will only apply to the 1000… (and there might be benefit in kind implications of the additional 0% finance). All Companies are given a carte blanche 1000 CCA licence to allow participation in C2W.

As posted by others above – it is a tax relief scheme, and must surely be considered as "under threat" from a hard pressed Chancellor.

That said, I am sure that the cost of giving the relief is minimal compared to othere schemes to encourage people towards greener transport. Council green transport plans anyone? Ineffective cycling infrastructure? Cycle lanes to no-where, blatantly installed to use a bit of year end budget – must all run in to waste millions.

and that's before you get to the money spent on (and promoting) non-green transportation 👿 Anyone for a new runway at Heathrow

The £1000 limit is governed by the Group Consumer Credit Licence issued by the OFT to cover the employers Cycle To Work schemes which is a regulated Hire Agreement under the Consumer Credit Act. To exceed this limit a company would need their own Consumer Credit Licence – about £750 to purchase I think.

We've set up our own scheme and are not willing to exceed the £1000 limit as the employees top up is a bit of a grey area during the hire period and valueing the bike at the end of the agreement. We also feel it is not within the spirit of the scheme. The same goes for purchasing frames, components etc.

Not wishing to be a miserable begger but every week there are threads on this public forum on how to bend the rules for the scheme, and I think we will ultimately see it's early demise

rkk01… but a company with a consumer credit license issuing vouchers for more than £1000 is not topping up, it is just giving out higher value vouchers for which you recieve the tax exemption on the whole amount.

Whereas, if you could top up a £1000 voucher with your own cash, you would only be getting the tax exemption on the £1000 part, and not on the total value. If you then got the tax exemption on the whole amount then I would suspect this is tax evasion or some such thing that would be rather frowned upon even more by HMRC!

So, even if you could top up the amount, I would suspect it only really works for relatively small additions as you will more than likely be paying book price for the kit… whereas if you paid in cash you'd likely get a lot better price. For example:-

For £1k vouchers you'd pay back about £650ish after buying the bike from your employer at the end.

For £2k, £1k voucher, £1k cash top up, you'd be paying a total of £1650ish back… that halves the % discount you get from the tax break, and brings it into line with what you could have got the bike for cash.

Above that it gets less and less % discount…

Not wishing to be a miserable begger but every week there are threads on this public forum on how to bend the rules for the scheme, and I think we will ultimately see it's early demise

Not wishing to be a cynic, but I think any tax break schemes are vulnerable because of the enormous hole in the budget, rather than the odd person doing something not quite in the spirit of the rules. Which no-one seems able to quote thus far….

Have a look here…

It says:-

Q. Can I put some of my own money towards a more expensive bike than £1,000 if the employer does not have a consumer credit licence?

A. No as this would mean shared ownership and no tax exemption would apply.

Well done funkynick – that's how we have interpreted the rule, good to see it on an official DfT document.

I knew I had read it somewhere… it just took a bit of finding!