I wonder how many bikes are sold within 4 years when the ‘own it in 4’ has been chosen.
Yes they do. Loads of people, including myself, think it’s grossly unfair that richer people benefit loads more from cc vultures and pension tax relief.
That's a slightly different thing though isn't it, that's about the amount of tax relief you get, not whether you should get any. And I happen to agree with you, it seems reasonable that basic rate relief is available on this stuff, but not higher rate.
But childcare vouchers and pension contributions can only fund the thing they are supposed to fund, whereas Cycle to Work is, if we're honest, massively abused - it's supposed to be about helping people get a cheaper, healthier and more environmentally friendly way of getting to work, when in most cases the bikes bought are rarely, if ever, used for that. We are, in effect, getting the taxpayer to subsidise our hobby.
I wonder how many bikes are sold within 4 years when the ‘own it in 4’ has been chosen.
I think we could safely say that if i bought something it wouldn't be here in 4 years 😀
and our wives' hobbies and our kids' hobbies...
Well, yeah, 'zactly
I find it especially obnoxious that C2W is not available to employees where the repayments will take their effective hourly rate to below national minimum wage.
Many of those who this would benefit from this, albeit a financial benefit a lot smaller than the better paid, are excluded from this when it could free them from reliance on paid for/public transport.
🙋 I use mine to ride to work.
I find it especially obnoxious that C2W is not available to employees where the repayments will take their effective hourly rate to below national minimum wage.
Many of those who this would benefit from this, albeit a financial benefit a lot smaller than the better paid, are excluded from this when it could free them from reliance on paid for/public transport.
Yeah, that's no good
I use mine to ride to work.
Oooh, get you 😉
I cycle to work every day when not on call (one week in four) and need the work van, but my current commuter wasn't bought on C2W. My new bike will hopefully be bought on C2W, but I most likely won't be commuting on it. Where do I stand on the morality scale out of interest?
I think the pitchforks will be coming!
Where do I stand on the morality scale out of interest?
Somewhere between Fred West and Pol Pot 🙂
Where do I stand on the morality scale out of interest?
Somewhere between Fred West and Pol Pot 🙂
Move along - that's my spot.
As might be of interest to others too, the wording in the agreement explaining the £2180 gross reduction says
“(The £2180) which is made up of the purchase cost of the items plus the amount it will cost my employer to fund this purchase.”......It might be something the employer opts to do, some maybe waive the financing cost rather than pass onto employee. I work in public sector and hence maybe finance cost has to be passed on rather than public purse. Anyway, moral of story check the numbers and read the small print. Bit of a minefield.
When a scheme is set up the employer has options of how to pay for the bikes purchased via the scheme. Many opt to pay the supplier outright, many take a finance option involving a third party company. Lets say an employer expects 5 orders per month for a total of £10,000. Not every company can pay the supplier £10k, or whatever, every month, so opt to finance the scheme. What you are seeing is the cost of financing the scheme, as you've said.
What you don't seem to have worked out though, is that the figures you are quoting are from gross pay, ie it is the actually salary sacrifice, on which you don't pay tax or NI. So, the actual amount you are paying for the order, if you are a basic rate tax payer is 68% of £2180, £1482.40. You are losing out on maybe £120, if your employer had opted not to use a financed scheme, but still making a substantial saving.
What you don’t seem to have worked out though
What makes you think he hasn't worked that out?
Looking at what he wrote, he seems to be well aware of that.
What makes you think he hasn’t worked that out?
Looking at what he wrote, he seems to be well aware of that.
Because he/she said:
In wonder how many basic rate payers end up paying more than the initial purchase price without ever realising.
They aren't paying more than the initial purchase price.
In terms of the finance charge, I still can’t find any reference to it existing. Does anyone have a link?
In terms of the finance charge, I still can’t find any reference to it existing. Does anyone have a link?
I googled 'financing a cycle to work scheme'. First result:
Yes they do. Loads of people, including myself, think it’s grossly unfair that richer people benefit loads more from cc vultures and pension tax relief.
What about non cyclists? You could argue C2W is grossly unfair to them.
Let’s not kid ourselves C2W is a nice little tax avoidance scheme which you’ve been happy to indulge many times.
Because he/she said:
In wonder how many basic rate payers end up paying more than the initial purchase price without ever realising.
I'm assuming that was just hyperbole, or he was factoring in surcharge on sale items and the final payment fee which would actually take you damnd close to the break even limit.
Given that he wrote:
Don’t forget about finance costs. Often not transparently stated but our scheme near 10%. So it’s purchase price plus finance cost that comes out your gross.
And:
But should be obvious when gross deduction is stated as more than your purchase price
and:
The charge to the employee gross is voucher value plus finance cost.
£2000 bike and voucher. Gross deductions £121.11 x 18 months = £2180
pretty obvious to anyone that a £2k bike costing £2180 gross
I think he understands. But let's ask him...
Bri, did you realise the finance cost was added on to the amount that is take from your grosspay?
😉
Cheers Jon,
Makes my something like £2k saving look ever better value!
I've used Green Commute Intiative twice now & had the pleasure of the research to set everything up at my previous employer, so know more about this than I'd like.
The % charge gets taken off what the scheme give the shop - so some places will just add that to the bill so they don't lose out. In my opinion, GCI was by far the best scheme if you have a say in the matter - they only charge 5% commission and their extended 'hire/ownership' period model effectively means you pay them £1 after 5 years, rather than the larger final payment of the others.
Quick illustration close to what I did:
- Wanted a £3k bike from shop.
- Employer bought 'voucher' from GCI for £3157.90
- GCI kept 5% of the voucher total (£157.90)
- GCI paid shop £3k
- I paid my employer £3157.90 from pre-tax salary as quickly as possible (schedule is up to you and employer - think the only legal restriction here is that it must not take you below minimum wage)
- GCI own the bike for 5 years but 'loan' to me
- I ride the bike
- After 5 years, I will pay the cycle scheme nominal £1 transfer fee.
...and a side note that I'd rather not have had first-hand experience of - if the bike is stolen, there's no transfer fee to pay.
The % charge gets taken off what the scheme give the shop – so some places will just add that to the bill so they don’t lose out.
Unless I'm misreading you, that's nothing to do with the employer finance schemes mentioned above, that's simply a shop adding a surcharge to the order to offset the commission owed to GCI.
I’ll not confess to what I do for a living but take it for sure I know the difference between gross and net.
As the generalist guessed, yes that was my point. Finance cost on top, plus an end of life residual to pay (our scheme seems to no longer offer extended hire so bigger residual at end of 18mths) and for a basic rate tax payer it starts to be borderline if over full term there’s much of a saving, if any.
Some will still like the pay monthly convenience etc but on simple arithmetic under the scheme I was on, your be cheaper potentially buying in cash from LBS and more so if as cash buyer you secure a discount on RRP. Assuming you have cash (i get that important point).
To be clear I’m talking of my experience of our scheme. Clearly other schemes differ per this topic.
The myriad of views on here just emphasise to me the complexity, lack of transparency of some schemes and different levels of understanding there is.
If nothing else this topic might give some useful insight for anyone new to schemes.
It should scrapped and just stop charging VAT on bikes.
Finance cost on top, plus an end of life residual to pay (our scheme seems to no longer offer extended hire so bigger residual at end of 18mths) and for a basic rate tax payer it starts to be borderline if over full term there’s much of a saving, if any.
For your £2k bike, with finance cost and end of scheme payment, you’ll pay £1620 over 12 or 18 months. A £380ish saving. The word ‘borderline’ is doing some heavy lifting there.
Btw, the not so secret thing about C2W schemes is not to use Cyclescheme - not all providers take a final payment. Also, try to persuade your HR department not to use finance and then the savings are better, as you say.
25% residual as I recall and tax on that. Again, some schemes may differ but on ours 9% lost to finance charge, say 5% tax on residual. A fair chunk of headline saving disappears to a basic rate tax payer.
Just as many do with pensions, or childcare vouchers (funny how no-one questions the morality of those salary sacrifices).
Yes they do. Loads of people, including myself, think it’s grossly unfair that richer people benefit loads more from cc vultures and pension tax relief.
https://singletrackworld.com/forum/topic/fix-your-bike-voucher-how-did-you-spend-yours/
So weeksy thought I should use a £50 voucher to fix my old bike up, which I ride to work on everyday and yet....
I'd get a bike in cycle to work but not a 40% tax payer and my employer doesn't do it, you would imagine it would be available to all public sector workers wouldn't you!
Should NOT, that should read 😄😄😄
