[Closed] Cyclescheme having a laff

It's only confusing if you are either Hard of Understanding or too lazy to read the terms and conditions.

at 1k, you pay 7% of the value. Your agreement continues for 3 years at a cost of £0 per month for tax reasons. You are free from the moment you pay the 7% to get a new cyclescheme bike.

Buyer beware - I would have read the small print.

It is not a paper exercise. You do not own the bike. The Inland Revenue cottoned onto the idea that three year old Bromptons are worth a lot more than a nominal 3% of the purchase price. So the scheme was changed to reflect the fact that at the end of three years, there is still a benefit in kind (depending on the value of the voucher). And you have to pay for the bike or give it back. Even with 40% tax relief, it's not the bargain it once was.

It's called terms and conditions.When entering a financial contract it's is best practise to read them [b]before[/b] you sign legally binding agreements 🙄

I am pretty sure I can read, and am fairly adept at reading "complicated" instructions. I think you missed my point entirely though.

Which was this - Buy your bike over one year at £xxx, then its yours.

Novel idea I know, but if you trot along to your local LBS, their 0% deals do the same thing for diddly hassle and without a long winded explanation on "terms"

Option 1

[i]if you trot along to your local LBS, their 0% deals do the same thing[/i]

bar any tax and vat benefits buying through the scheme might give.

It's a straightforward case of a lesson learnt then isn't it?

Buy your next bike through a 0% finance offer and leave the C2W scheme alone?

I'm going through the end of year 1 arrangements with my bike and was fully aware of how it was going to end and am happy to treat it that way.

With C2W you're in effect leasing a bike that you then have the option to purchase. I wouldn't expect to new car I had 2 years ago to be given to me FOC in another 2 years time when the finance agreement is up so likewise with my bike.

Novel idea I know, but if you trot along to your local LBS, their 0% deals do the same thing for diddly hassle and without a long winded explanation on "terms"

But you pay income tax on the cost of the bike if you just 'buy' it from a shop. The whole point of cycle scheme is that you dont pay income tax on the money that was used to pay for the bike, ie it works out cheaper than just buying the bike from a shop in the usual way.

I think you're missing the point of the cyclescheme.

I tried to buy a bike on the C2W scheme but failed to find anything I would remotely want for £1000. I really tried, but just couldn't bring myself to do it.

How do the rest of you do it? The minimum I could bring myself to spend on a commuter bike is £1500.

[url= http://www.cyclescheme.co.uk/employers/employer-updates/hmrc-update ]Try this[/url]

It makes it all pretty clear. You will be a 7%er as you spent over £500. Just a shame you managed to get to the end of the first year before cottoning on to what you got involved in!

Gee - 😯 . It's a commute bike, supported by the government by giving you a tax break - to promote people out of their cars - it should not be for buying a pimpy bits of bling. If that's your thing you just have to pay the tax and that seems totally reasonable to me. Plenty of sub £1K bikes will get you to and from work reliably for years to come.

The aspect that really hacks me off with the C2W scheme is that the people that make the biggest saving are the people who least need the financial incentive. IMO only high rate tax payers make a worthwhile gain using the scheme now.

The end of contract terms do seem a bit sharp and reduce the saving but are clear and there for all to see.

Just pay the 7% you have still saved on it all.

sangobegger - Member

Buy your bike over one year at £xxx, then its yours.

I don't think it's marketed as such though, is it?

Last week received a bulletin at work for the scheme - pay a flat fee of £250 at the end of your 12m lease and the bike is yours.

7% instead sounds like a pretty good deal to me. Stop your greetin'

So just to confirm on a £1000 bike - after the 1st year (£80odd pm) I pay a 7% 'deposit' and enter into a 3 year deal (£0pm). Once that period is over they keep hold of the £70 and I keep the bike without any further £££ changing hands? If so seems like an ok deal, not quite what it once was but...

The minimum I could bring myself to spend on a commuter bike is £1500.

WTF? Seriously? For something to cycle to work on £700-800 should get you something pretty decent. It's not like you'd want to run Dura-Ace / XTR on a bike getting regularly covered in salt, muck and water.

So just to confirm on a £1000 bike - after the 1st year (£80odd pm) I pay a 7% 'deposit' and enter into a 3 year deal (£0pm). Once that period is over they keep hold of the £70 and I keep the bike without any further £££ changing hands? If so seems like an ok deal, not quite what it once was but...

yes, and the £80odd pm is before tax, so saving you either 40% (£400) or 20% (£200) income tax on the £1000, depending on whether you are a higher rate or basic rate tax payer.

geetee1972 - Member
I tried to buy a bike on the C2W scheme but failed to find anything I would remotely want for £1000. I really tried, but just couldn't bring myself to do it.

How do the rest of you do it? The minimum I could bring myself to spend on a commuter bike is £1500.

I know you're not as big a knob as this makes you sound, but I bet others don't. They'll have to take my word for it.

[i]I know you're not as big a knob as this makes you sound, but I bet others don't. They'll have to take my word for it. [/i]

It's ok, I assumed there was a missing 😉 at the end and he was taking the pee out of stw attitudes to non-expensive bikes 🙂

I was lucky with my Cyclescheme bike (before the changes)- I got made redundant 1/2 way through the year and the firm didn't ask for anything 8)

Cheers,
Jamie

c2w sucks. The retailer looses 10% of the sale to the scheme, which they often cant afford, especially considering how time consuming c2w sales tend to be. It's a very cynical business model, as most businesses don't realise that they can administer their own schemes.. The c2w scheme maintains an air of officiality even though it's only a private company. They can suck my balls. I'm glad I don't have to work with them anymore! Contrast this to something like the Bristol Uni scheme.. They would send us a cheque covering £800 of the bike's value, with the customer free to top up what they wanted.

Your LBS will like you far more if you go out and get yourself a new credit card with 0% on purchases. They'll be able to do you a deal, or sell an already discounted bike. You'll probably get a better discount overall, no ties to your place of work, and 18 months to pay for it.

bikewhisperer
c2w sucks. The retailer looses 10% of the sale to the scheme,

The best way to look at it is a interest free loan for a period that doesn't require any credit checks.
The saving is fairly minimal compared to what it was when the scheme first started.

I saved money using it over walking in and buying it. Only half way through at the mo.

If you don't like it don't use it, simples. I hope its still about for my next bike.

Our C2W scheme has a limit of £3000. I think the company has to be able to offer a Consumer Credit Agreement for the higher limit. I bought a nice bike, but still couldn't stretch to Dura Ace, even after topping it up!

And yes I do ride it to work (on sunny days and when there is a club ride or race after work 😉 )

[i]The retailer looses 10% of the sale to the scheme
[/i]

and
[i]
They'll be able to do you a deal[/i]

seem to be a bit at odds with each other.

If I get 10% off for buying direct isn't that the same loss to the LBS as the retailer giving 10% to the ctw provider?

Our C2W scheme has a limit of £3000. I think the company has to be able to offer a Consumer Credit Agreement for the higher limit.

They'll have a consumer credit licence to be able to do that. Then the £3000 is at their discretion.

wwaswas.. A common offer in a place I used to work was offering 10% of the value of the bike in free accessories.. Effectively a 10% discount to the customer, but only costing 5%. Either way, there's no reason to give the cyclescheme 10% if you can avoid it. They do nothing to help retailers directly, except I'm sure that big entities such as Evans can negotiate a discount. It all gets ploughed back into pushing the scheme to more businesses, and nothing to promote the retailers that support them.

I was going to enter into this years scheme but it just doesn't appeal. Yes, it seems overly complex vs the old 'pay no tax on it and buy it at the end of the year for a nominal fee' type thing but it also doesn't seem to make much financial sense when I was doing the sums unless I wanted to keep the bike for 4 years (which would be a rare thing for me).

Makes a lot more sense to just buy something in the sales or get something second hand.

I figured that out in 10 minutes of reading the blurb. Maybe the OP should have done the same a year ago...

They do nothing to help retailers directly, except I'm sure that big entities such as Evans can negotiate a discount. It all gets ploughed back into pushing the scheme to more businesses, and nothing to promote the retailers that support them.

I worked in a few LBS and Evans during the first few years of the scheme.

The introduction of the scheme increased sales of bikes. Maybe not a great to the enthusiasts but certainly to the masses. I can't see many retailers wanting to ditch the scheme unless they are wanting to move into another market.

I've also checked my agreement:

Under 4.0 Salary Sacrifice and Hire Period

"At the end of the hire period, the owner of the equipment will contact you to disscuss what is to happen next."

Isn't this the employer? I just asked my boss if I had to pay anything at the end of the scheme and got a "Nope".

Im really thick i still don't get it. Though i am very interested in this as my company have this cycle to work ..

So, in a £1000 bicycle ... How much do i really pay at the end of the day ? (End of contract)

So, in a £1000 bicycle ... How much do i really pay at the end of the day ? (End of contract)

I would be paying £665 for a £1k bike. over 12 months.

@singlespeed .. Cheers. I'm in 🙂

My company gave the bikes to us (this is current as the scheme has only just ended). We just had to pay the taxable benefit.

" Company Name will give you the equipment at no charge, making it a taxable benefit. You would then simply pay tax on the value of that benefit over the course of the following tax year. Company Name would make an adjustment to your pay code using a P11d tax declaration on your behalf.

How to work out your taxable amount

1. Start with LoC amount (eg £1000)

2. Calculate the 'residual value' of your LoC using the HMRC matrix below
(eg £1000 LoC x 21% = £210)

3. Multiply the 'residual value' by your tax rate
(eg £210 x 20% = £50 tax payable via P11d)"

The introduction of the scheme increased sales of bikes.

Unfortunately £1000 doesn't get you the value it did when the scheme started pre-2008. I asked c2w once what they were doing about lobbying the government to increase this. They didn't have a clue.

EDIT: Eskay's company have got it right!

Not so fast Wolfie...

A £1,000 bike costs £1,000 using C2W. What you are saving on is how much money you have to earn to get £1,000 in your pocket (as you don't pay TAX or NI on it) which depends on your TAX bracket. Shep up there must be on 4o% to get it at that price - your may be more expensive.

Sorry should have said it can vary person to person and also what ever the agreement is at the end of the process. As far as my boss and I are aware we won't we paying anything at the end of the scheme. (We are the only 2 on it currently)

But as it stands the calculator on the website is only a couple of pence out from the agreement I have here.

More and more staff here are looking at it and the accounts team are looking at what other options are available.

😕

So in laymans,laymans term .. If my tax is 20% .. My savings for a £1000 bicycle is 20% ?

Shep on the other hand has 40% tax rate.. Thats why he pay only £600+ of a £1000 bicycle at the end of the day?

Wolfenstein if in doubt, get your accountant/accounts people to have a look at it at work. they should be able to give you the exact figures for yourself based on what agreement you'll have between them and also your salary.

Everything else from us all on here is variable.

In short, and over a 12 month period, if you're a lower rate tax payer, it's just not worth it anymore.

Yet another perk which favours the wealthy.

Tax dodgers beware - I would have read the small print.

FTFY

I think it is still worth it.

I've used the scheme but my mate at work got the best deal.

The bike cost about £450

He is higher rate and had NI reduction so that is 52%

So after 12 months he had paid about £216

He then paid a 3% deposit £13.5 and extend the lease for 3 years.

So effectively he will have paid for £229.5

Oh and we run the scheme ourselves instead of using the money grabbing cycle schemes that skim 10% just as bad as letting agencies and their fees.

[EDIT]

Even for me I got a good deal list price for bike at LBS £850

Knocked off 10% list price of the bike because we don't use money grabbing cycle scheme. I got a load of stuff to go with the bike total voucher £900.

I'm only lower rate so 20% income tax and 12% NI

total of %32 so after 12 months I've paid £612 then pay £63 deposit for the three year extension.

Total cost £675

wolfenstein - Member

So in laymans,laymans term .. If my tax is 20% .. My savings for a £1000 bicycle is 20% ?

Almost. You save a bit more than just 20% when you take in NI contribs too. But this is offset when you factor in any charges (7% on a £1k bike) for hanging on to the bike for 3 more years. I'd say you are closer an 18% saving on a £1k bike, which may or may not be worth it (i thought it was btw).

£1000 would cost me £680. Plus £250 buy at end. But because I want the P-X carbon cross bike, also add £100 admin fee.

= £1030 sad face

Not if you are P-X, who helpfully pass it on directly to the 'customer' at the point of the 'hire'

Isn't this the employer? I just asked my boss if I had to pay anything at the end of the scheme and got a "Nope".

jamiep - Member
£1000 would cost me £680. Plus £250 buy at end. But because I want the P-X carbon cross bike, also add £100 admin fee.

= £1030 sad face

If you could get your company to run it's own scheme then no need for £100 admin fee and if you just extend the lease then you only have to pay 7% £70 not £250

That's £750

[quote=eskay ]My company gave the bikes to us (this is current as the scheme has only just ended). We just had to pay the taxable benefit.

Given the calculated tax cost, why don't more companies just do that instead of all the other complicated stuff? Seems the best solution for all concerned.

The main thing for me is the status of the bike at the end of a year and beyond, which for me diminishes the saving further.

This depends on the company of course: but at the end of the first year, getting the option of an extended lease means you still do not own the bike, right? Our company offers this, for a tiny fee you continue to use the bike for 5 more years. For me though, after a year of paying money, I would want to own the darn thing. It basically turns into a 6 year lease with the bike effectively worthless at the end. I wouldn't feel like it was mine, or would want to make upgrades. I'd rather pay a bit more and own it from the beginning, with freedom to make changes and re-sell at an OK price whenever I choose. Obviously i'm the wrong kind of person for the scheme and it works for many, but it's not that great a deal when you think beyond the bottom line costs. It's not good value, unless you are on a higher tax bracket.

aracer - Member
eskay » My company gave the bikes to us (this is current as the scheme has only just ended). We just had to pay the taxable benefit.
Given the calculated tax cost, why don't more companies just do that instead of all the other complicated stuff? Seems the best solution for all concerned.

If it is done like this after the 12 month lease do you effectively pay tax on the reasonable disposable value i.e. 25% so in effect as a lower rate tax payer I would pay 5%? Do you have to pay NI?

See, what I don't understand is why would I enter into a credit agreement (even a very favourable one) to buy a bike, with no guarantee that I'll get to keep the bike at the end of it.

All the info on the C2W website (see the link posted on first page of this thread) - says that either C2W or the employer 'may' offer the bike to the employee. May Offer? Why the ambiguity?

I asked my employer what happens at the end of the scheme - they had no idea.

For that reason, I'm out.

Just checked our C2W page and it says to make sure you insure it, how does that work then, I can't claim for a company laptop on my home insurance so how can I claim for a company bike? and if my insurance does replace a stolen c2w bike who owns it?
v.complicated.

Evan's website has a very handy calculator which tells you the costs, savings and monthly payments depending on your price of bike, accessories and salary/tax.

You're not buying the bike (unlike a 0% finance) you're leasing it - with an option to buy later

You are all completely missing the point.

C2W was dreamt up by a minister who was struggling to convince his wife that they could afford a new shiny bike. Even MrsMC fell for it 😆

[quote=fr0sty125 ]If it is done like this after the 12 month lease do you effectively pay tax on the reasonable disposable value i.e. 25% so in effect as a lower rate tax payer I would pay 5%? Do you have to pay NI?

Yes - it belongs to your company and if you get given it for free at the end of the lease then it's a benefit in kind of the disposal value. I'm not an accountant, but I believe only tax, not NI is payable on benefits in kind.

The retailer looses 10% of the sale to the scheme, which they often cant afford, especially considering how time consuming c2w sales tend to be

Rubbish. If they can't afford that then they don't need to offer C2W

I know of at least 6 people who have purchased a bike through C2W who almost certainly would never have got a bike otherwise, retailers may 'lose' 10% but they are selling more bike because of it. And any sensible LBS would also use this as an opportunity to 'upsell' and sell clothing, luggage, service plans etc as well.

The one thing I can say about Cyclescheme is they are very upfront with costs etc, non of this should be coming as a surprise to you now.

See, what I don't understand is why would I enter into a credit agreement (even a very favourable one) to buy a bike, with no guarantee that I'll get to keep the bike at the end of it.

All the info on the C2W website (see the link posted on first page of this thread) - says that either C2W or the employer 'may' offer the bike to the employee. May Offer? Why the ambiguity?

You would not be entering into a credit agreement, you would be leasing the bike.

If they guaranteed you would own the bike then they would be offering you credit, that is why they have to say say they 'may' offer to sell.

I think in the history of C2W scheme , it is very unlikely that anyone has not owned the bike at the end of it. Certainly I have never, ever heard of this happening.

Lots of people struggling with the concept here.

No offence franksinatra, but many can't afford it and can't afford to turn away c2w business either.

"I drink your milkshake!"

[url= http://singletrackworld.com/forum/topic/cyclescheme-why-so-bloody-vague ]Almost identical thread[/url] when I came to the end of my year.

Do the 3% deposit, then you own the bike. Don't worry about the 3 year thing, that's just paperwork.
I paid £66, shortly after received an email saying I'm eligible to start a Cyclescheme purchase again!

Its not a Bike, its especially not YOUR bike its an "Asset" owned by the C2W scheme operator.

HMRC got a bit huffy a couple of years ago because C2W schemes were being, oddly enough, used as a means for private individuals to acquire goods without HMRC getting their slice, the "Transfer of ownership" fees were in many cases laughably small, HMRC decreed that they wanted tax revenue's proportionate to the actual value of the bicycle, not the price it was sold at, the bike might be sold to you for a nominal £50 but if its really "Worth £750" HMRC want tax revenue based on that.

The work around? quite simple really - Extend that "lease period", allowing the bike to de-value as much as possible before you transfer ownership, a 12 month old bike holds a fair bit of its original value, a 48 month old bike could (potentially) be written off or at least valued at a fraction of its original sale price...

Essentially OP the C2W company are giving you options to try and help you avoid as much tax as possible...

Buy the bike now if you want, extend your lease period for a nominal sum and you [U]may[/U] pay very little in another 3 years to actually, finally own the thing, but basically, by degrees C2W will save you 1% of bugger all, so just get used to it.

No offence franksinatra, but many can't afford it and can't afford to turn away c2w business either

Exactly, better to sell bikes and lose 10% then not sell bikes at all. They just need to use a bit of initiative, and business drive to make sure they make that 10% back in other areas (risk now that we enter into a whole LBS thread)

Or better still to give away 10% in goodwill, which could produce a return in business, than give it to a bunch of cynical arsebags who don't care much if it's you or the next shop.

I agree it's a good "in" for a sale. For the retailer though it's the most expensive finance available, and as such sucks.

And nooo.. no LBS thread. It's a reasonable matter to choose between "I'll give my money to whoever supplies me the cheapest" and "I like to know that the supplier isn't losing out because of the way I choose to pay".

You would not be entering into a credit agreement, you would be leasing the bike

I await all the missold c2w cases in a few years 😉

Absolutely clear when our employer started C2W that it was a lease deal - the employers blurb, all the Cyclescheme documentation stated it clearly, there was specific reference to the payment at the end to retain the bike. I calculated the costs including the final payment, could probably have got a deal or 0% somewhere that would have got close to it, but it was a convenient way to make a small saving even after taking that into account.

Mind you, my employer is HMRC.

So it will be interesting when our 12 months come to an end in April/May, and I was one of the first to take it out. I shall no doubt be starting my own thread in due course.....

Flaming gits at Cyclescheme decided to apply this retrospectively to current agreements when HMRC updated the rules. They didn't need to, I argued that it wasn't what I signed up to but was told essentially tough. I paid the fee to keep for the further period, then bought it and sold it immediately. Go to your LBS use their 0% if they do it.

[quote=Spud ]Flaming gits at Cyclescheme decided to apply this retrospectively to current agreements when HMRC updated the rules. They didn't need to, I argued that it wasn't what I signed up to but was told essentially tough.

You were probably told that you misunderstood what you signed up to (as above, it is a lease, with no obligation on them what happens at the end of it).

See, what I don't understand is why would I enter into a credit agreement (even a very favourable one) to buy a bike, with no guarantee that I'll get to keep the bike at the end of it.

All the info on the C2W website (see the link posted on first page of this thread) - says that either C2W or the employer 'may' offer the bike to the employee. May Offer? Why the ambiguity?

I asked my employer what happens at the end of the scheme - they had no idea.

For that reason, I'm out.

There isn't any ambiguity. It is common for cycles provided under salary sacrifice arrangements to be sold or transferred to employees after the end of a period of loan. [b]The income tax and NI exemption for certain loaned cycles will be prevented from applying if any agreement builds in from the outset an automatic transfer of ownership to the employee at the end of a loan or hire period[/b] . However, where this is not the case, there is no contradiction in an earlier exempt loan being followed by a decision by the employee to buy the cycle.

Not if you are P-X, who helpfully pass it on directly to the 'customer' at the point of the 'hire'

That's compensation for dealing with PlanetX! 😀

spud

same thing happened to me - had a bike on the scheme (a folder that I did use everyday for work, not a bling 140mm travel 'commuter') and HMRC changed th rules halfway through. Because the whole 'extend the lease' hadn't been dreamt up and there were only a couple of us on the scheme my employer simply said this is too complex and stopped running the scheme and I was left with a £250 bill for some reason - in the end my bike was RRP £975 and cost me about £920! I might as well have gone for a special deal or 0% etc.

I argued the toss and my employers ended up footing the bill and I just paid the tax on it as a BIK

Great scheme cocked up

Bike shops also pay a premium for 0% finance.

I've seen a few that operate a similar no or little discount policy on Finance and Cyclescheme.