[Closed] An idiots guide to the cycle to work scheme..?

Anyone...?

Lots and lots about this on the forum already, but there are so many unique circumstances that you should seek info from your HR department,

loddrick - the very brief summary (but you need to understand how your particular company and financial situation applies).

1. The company buys a bike.
2. The company provides you a bike to use (that benefit is tax / NI free) for the main purpose of commuting to and from work.

In practice what most companies do:

1. They let you pick a bike; depending on the scheme this may be:
a) restricted in value (often to £1000)
b) restricted in the shop you can buy from
c) restricted in the range of bikes you can buy

2. Someone at your company does some paperwork, and you get the bike from the shop (usually by getting given a voucher). The voucher may often be used towards safety kit too.

3. You sacrafice salary to lease the bike. In practice most companies will sacrafice 1/12th of the bike cost from your gross pay each month. These payments used to be VAT exempt for companies which could recover the VAT on the bike purchase. This is no longer the case.

4. You ride the bike.

5. After a year you don't own the bike. The company does. The rules on how you get to acquire the bike are complex. Firstly the company can't promise you the option to buy at all - you run the risk that the company for some reason keeps the bike and does what it wants with it (which you have just subsidised the purchase of!). In reality most companies will let you keep the bike - the rules the company uses will depend on the scheme operator and their own views but will usually involve something like 1 more month of lease payment being deducted from salary - BUT this varies widely.

You need to understand:

What does salary sacrafice do to pensions payments? or other earning related parts of your "package"?
What could it mean to maternity pay, or other similar earnings related "benefits"?
What happens if you decide to leave the company part way?
What happens if they make your redundant / fire you?
If you are low earner would the sacrafice make you below minimum wage?
Historically how has the company treated the "end" valuation of bikes and what is their expectation going forward? (they can't make promises)
If you are planning to buy lots of safety kit (helmets lights etc) then what is the view on valuation of that - because clearly 25% might be fair market value for a 1 yr old bike but its not for a used helmet etc.

Because you would have been paying tax and NI on the earnings you sacrafice you save money - but how much you save depends on your tax band and the companies approach/policies. Unless you are a 40%+ tax payer the benefits are marginal now on most company schemes, although it is still effectively a 0% finance scheme.

In general bike shops won't give you any extra discount on list price because they will pay (typically 10%) of the purchase cost to the scheme administrator. Assuming your scheme is being run by one of the big name schemes not some local one off arrangement. Usually if the bike is already on sale the shop will honour the sale price.

as far as i can see, so many hoops to go through, and so many loop holes thoroughly closed that it makes little sense now

at best as stated above seems to be a 0% equivalent - could use a credit card

IMHO, save up for a bit and go haggle in a bike shop!

it does depend on where you work, however beware a scheme that seems to offer a really good deal! i suspect corners are being cut for lots of the stories i've heard.

Many thanks chaps.