[Closed] Cycle to work scheme - big swizz?

@kinda666 was an email direct from cyclesheme

I've just arrived at the end of my term, so in same boat as OP. I was aware of the final payment to hire for an extra 3 years though, but as someone else mentioned - I'm in the process of ignoring it...see what happens!

One thing though - I'm really struggling to work out the actual cost of the bike. The full value including accessories was £1150. My pre-tax repayments have been £95 over the course of the year and they want £85 off me for the extended hire period.

I get that the savings are incurred through reduced NI & PAYE contributions, but for me these differ each month due to other pre-tax stuff such as holiday purchase schemes, expenses etc.

So is there a simple way I can figure out exactly how much I have paid for the thing?

I got a Boardman CX team on sale for £590 - 40% tax plus they gave me £140 quids worth of accessories for free.

So basically I got a helmet, 2 sets of lights, new pump, pedals, and a boardman cx team for £340 quid...

result!!

This just goes to show that if you work it to your advantage, C2W is still well worth it for some people.

I've got a 2016 Arkose 3 on order (£1000) which comes with £60 worth of free stuff via the C2W deal.
So, my £1060 purchase from Evans is going to cost me £580ish + a small BIK payment at the end of the scheme.

Still feels like a no-brainer to me..

No more than pretending that you ride the bike to work regularly (if at all)

Are you stalking me ?

No, but @MoreCashThanDash might be 😉

So is there a simple way I can figure out exactly how much I have paid for the thing?

Yes. Add up all the payments you have made, and that's how much you've paid. 😐

[quote=nealglover ]Yes. Add up all the payments you have made, and that's how much you've paid.

I presume you're deliberately ignoring the payments coming out of untaxed salary and peachos being interested in how much it's costing him in taxed salary. Which isn't the same.

The answer is that it should be possible to see how the amount of tax and NI you pay is calculated (your pay slip should break things down well enough to be able to do that in combination with your tax code - it's not generally that complicated). So simply add the payment back into your taxed pay and redo the calculation.

I blame cycle to work for the hike in bike prices and rounding off of many builds to suit it's maximum price.

In hindsight you should have researched properly before going ahead.

Remember that salary sacrifice may well reduce your pension contributions

It's not a con just because you don't understand it or read what you're signing for. At the end of the extended hire period the value of the bike is 0 so you pay nothing for

Well, according to what they tell me now, that ain't necessarily the case. Which is sort of the point.

I presume you're deliberately ignoring the payments coming out of untaxed salary and peachos being interested in how much it's costing him in taxed salary.

Well not really no.

The question was "how much has it cost me"

That's just a case of adding up all the payments that have been made. As I said.

If the question had been "how much Income Tax and NI have I saved myself from paying" then that would be a different answer obviously. But that wasn't the question.

But still not that complicated. Just add up all the payments you have made, and use an online PAYE calculator to work out the Tax and NI that would have been due on that amount.

OP: Have they explicitly said that your can't do the extended hire thing? Or are they just encouraging you to do the "buy now" option because that's best for them?

OP: Have they explicitly said that your can't do the extended hire thing?

I can do the extended hire thing but they don't say what I will have to pay at the end of it.

Right, I don't think they can. When HMRC tightened up on it they decided that telling you what you would pay at the end somehow made it 'wrong' and so you have to be surprised with it after a year or after the three extension years.
Nobody is going to come out and value your bike though. It will be a small fee, if anything at all. They're just not allowed to tell you that now (which is stupid, but it's based on the market value and they don't know what your bike will be worth in three years time).

Just extend it.

My approach to this was entirely optimistic:
- the money for this bike doesn't even go to my bank account, therefore I am getting a free bike
- now I've finished the 1 year scheme I get more money in my bank account than before therefore I am getting free money

I will gladly give both of my kidneys to anyone who can find a single flaw in that logic.

its an interest free loan.

Is it? I thought it was a hire scheme with various ill defined options at the end...

I speak as someone who took up an earlier incarnation of the C2W scheme, and essentially saved bugger all to eventually own a bike I wasn't that enamoured with... The three year wheeze wasn't in place, but then neither was the final value rule my 12 months hire charges essentially covered the ex VAT price of the bike, the final transfer cost effectively dragged it up to the original full RRP, no discounts available, limited to buying from Halfords FFS... The tax saving was negligible at best and TBH I would have been much better off taking out a 0% credit card and heading to the Paul's cycles site to spend the same amount...

As a scheme it's completely missed it's goal now, has it gotten many lower income people cycling to work lately? Doubtful TBH the £50 supermarket BSO is probably doing a better job in that regard... No C2W has become another way for mid-higher income earner's to try and squeeze themselves down a bracket while acquiring another toy... See also childcare vouchers and gym memberships, etc, etc all available as ways to drive down your pre-tax income...

^^Yep, you're not wrong. I also buy childcare vouchers for the very same reason - trying to hang onto that child benefit as long as possible..

I presume you're deliberately ignoring the payments coming out of untaxed salary and peachos being interested in how much it's costing him in taxed salary.
Well not really no.

The question was "how much has it cost me"

That's just a case of adding up all the payments that have been made. As I said.

If the question had been "how much Income Tax and NI have I saved myself from paying" then that would be a different answer obviously. But that wasn't the question.

But still not that complicated. Just add up all the payments you have made, and use an online PAYE calculator to work out the Tax and NI that would have been due on that amount.

Yeah, thanks for the pedants - it was pretty obvious what answer I was trying to get!

Looked at http://www.thesalarycalculator.co.uk/compare.php and entered my details then compared the with/without bike deductions. Couldn't get the figures quite perfect, but there or there about. Looks like the bike has cost me around £700 over the course of a year.

Plus the £85 extended hire works out at around 70% of full value. Not bad (if my calcs are right!)

.Looked at http://www.thesalarycalculator.co.uk/compare.php and entered my details then compared the with/without bike deductions. Couldn't get the figures quite perfect, but there or there about. Looks like the bike has cost me around £700 over the course of a year

I'm not being "pedantic" here, but if that was the figure you were after, then as I said, you just add up the deductions from your wage.

That's how much the bike has cost you 😐

So you've paid 70% of the full value of the bike, but it's still not technically yours though, until the end of the hire period. Which is 4 years in total. Not bad, but not great either.

All those comparisons above, about it being an equivalent to an interest free loan: once you have made all of the payments on an interest free loan (say, over 12 months) you then own the bike outright, as you would expect. You don't with C2W, it's a worse deal than that and not comparable.

I like the C2W scheme, but as far as encouraging people to ride to work is concerned I'm not sure it has worked. No-one needs a £1000 bike to ride to work and I suggest most bikes bought on the scheme are rarely if ever ridden to work.

Worth noting as well that if your monthly payments take you below minimum wage then you can't do it either. So the scheme is denied to those who arguably would benefit most from it. The same applies to childcare vouchers.

@nealglover:

Its not though, is it. We're looking at the difference between annual salary with or without the bike deductions. The difference for me appears to be ~£700.

I was about 2 years into the extended hire period when my employment ended. I asked them to look into what I'd have to pay to keep the bike and it seems to have been forgotten about.
Must've cost me £600 in payments, £70 paid at the end of the year to do the extended period, then nothing. Then sold for £300.
Pretty good deal on a £950 bike I reckon.

but it's still not technically yours though, until the end of the hire period

Aside from the occasional friendly email from cyclescheme, its pretty much my bike.

Why oh why couldn't they just make it nice and simple and just make all bikes under £1K VAT exempt?

Currently high rate tax payers who need the help the least, gain the most. Those on minimum wage aren't even allowed to take part! You have to work for an employer who takes part and then factor in the number of purchases that have nothing to do with cycling to work anyway. Just make cheap(er) bikes VAT exempt to encourage cycling as a healthy pastime and a method of commuting and be done with it. If employers want to add interest free loans for commuter bike purchases to their list of staff benefits (like buying seasons tickets are already for a fair few companies) leave it to them.

I like the C2W scheme, but as far as encouraging people to ride to work is concerned I'm not sure it has worked. No-one needs a £1000 bike to ride to work and I suggest most bikes bought on the scheme are rarely if ever ridden to work.

The girl i sit next to has bought 2 C2W bikes in the last 5 years. First one was £300, lasted a few years then got nicked, stopped cycling for after that as had bought a car. Second one was £600 bought 2 month ago and has been used for commuting 3 days a week on average. Chose C2W on both occasions as has little saving and poor credit.

STW is a biased example IMO, a lot of people do get benefit out of it.

Me and the wife did the cycle scheme this year. We had to use Hafords. We did really well out of it with accessories, I ordered extra stuff of their web site (some stuff cheaper than CRC) and then got 3 for 2 when picking it up. I look I reckon we got between us well over £2500 worth of stuff for our 1k vouchers for we'll pay £1300. We both got the bikes we wanted. But I won't do it again as you can't get choice of discounted bikes and there have been some stunning end of season deals this year.

I can do the extended hire thing but they don't say what I will have to pay at the end of it.

At the end of the extended hire period the bike should be zero; they've chosen the length of the period such that the final market value at the end of it has fallen to nothing. So you pay nothing in order to keep it. However, because it was technically a hire period you can technically hand the bike back at the end of that period.

I used the scheme when it still covered VAT, but haven't used it to buy any of the 3 bikes I've bought since due to both the discounts I've found, and the cost of the bike being over the £1000 limit Cyclescheme use.

The girl i sit next to has bought 2 C2W bikes in the last 5 years. First one was £300, lasted a few years then got nicked, stopped cycling for after that as had bought a car. Second one was £600 bought 2 month ago and has been used for commuting 3 days a week on average. Chose C2W on both occasions as has little saving and poor credit.

STW is a biased example IMO, a lot of people do get benefit out of it.

OK, that's a sample of 1.

I sell around 10 C2W bikes a week and the vast majority - probably in excess of 80% are either for kids bikes, MTB's, BMX's or are totally up front about it not being used for work.

The other anomaly is with the accessories you can get. A wheel truing stand is fine but a bike rack to go on a car is not. Slightly annoying to my customer who wanted to drive the first 20 miles of his 30 mile commute and ride the rest of the way. Still doable but the bike rack would have made it much easier.

So you've paid 70% of the full value of the bike, but it's still not technically yours though, until the end of the hire period. Which is 4 years in total. Not bad, but not great either.

How is paying 70% of the value with 0% finance "not great"

What sort of finance deal would you prefer, that's available elsewhere.

I've had mixed results with C2W scheme and am in a similar position to peachos.

However, I left my employment half way through my hire period and paid the remainder of the value of the bike from last salary before I left, which I knew would happen so fair enough.

I thought this was the end of it, but as my previous employer used an 18 month hire period, 9 months after leaving my job I got the same e-mail from the C2W provider asking my to pay £67 for an extended hire period.

I decided to do some calculations. My monthly deductions were £70 so I reckon the actual cost after the tax saving was about £48. The monthly amount plus the lump I paid in my final salary payment, combined with the £67 extended hire cost means I would have paid more than the ticket value of the bike! Unless of course I've calculated incorrectly.

I think next time I'll just buy direct...

How is paying 70% of the value with 0% finance "not great"

- By still not owning it

If I worked for HMRC *cough* I'd be very concerned to see

I sell around 10 C2W bikes a week and the vast majority - probably in excess of 80% are either for kids bikes, MTB's, BMX's or are totally up front about it not being used for work

on a public internet forum!

I did famously have to explain to a very senior colleague why it would be unwise of him to get bikes for his kids at Xmas on C2W. I had to use lots of small words, very slowly. A mate who overheard the conversation seemed surprised that someone on that salary could be that dim, but he was new at the time.

0% finance "not great"
- By still not owning it

Not seeing how that technicality is holding anyone back.

Is the bike, or the way they can use it, any different if they "owned" it

(apart from being more expensive obviously)

It's not that different from not "owning" your house because you have a mortgage.