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Wow, I'm amazed at how many people are having a go at the OP.
I'm in the same position, I signed up for my last bike thinking that I'd get it at 40%ish off. As I understand it's just tax/NI savings so not really something that hurts others considering how much we all pay anyway. The rules changed half way through the year meaning it was nowhere near as good an offer as it looked at first.
As per the OP, if I realised how much the end cost would be I'd have checked out the sales first. Still waiting to see my pay slip when the cash comes off as I never really got the way the letter was worded.
Don't forget the employer doesn't pay NI on the salary sacrifice either - therefore saving them even more money.
I don't blame you for being annoyed, it was marketed as a way to legitimately get a really good deal on a bike than you could probably normally get and they moved the goalposts...bad 🙁
Don't forget the employer doesn't pay NI on the salary sacrifice either - therefore saving them even more money.
Any idea what that is worth? I'm trying to pull together the numbers for the 'chat' I'll be having with them about this on monday.
If it was just a case of them having to apply new rules then fair enough, but I can't quite get my head around the thought that they may be profiting out of this.
I think NI is quite confusing compared to tax - this might help?
[url] http://www.hmrc.gov.uk/rates/nic.htm [/url]
...and obviously double check mt facts - I would hate for you to use it and be wrong!!
Doesn't help your 'chat' on Monday but the C2W scheme has to have benefited us, the cycling community. More people than ever seem to be getting bikes which means more on the 2nd hand market, more people using trails meaning more gets invested, and so on.
I think it is a great scheme...if more people bike then great. I just get annoyed with the stories of folk with lots of bikes and use the scheme for a play bike not a cycle to work scheme bike. It is a personal grumble.
Why should it bother you if I use the bike for commuting or not? I'm perfectly happy to commute on a 17 year old mtb so like to save the good bike for the weekend. Don't really see what the difference is.
I would like to see people getting forced to cycle in so many days over a year if they use the scheme but as long as it gets more people getting healthy on a bike I'm not going to complain.
In my workplace I'd say it's about 50/50 of people who are using the scheme for a play bike or never cycling in and people who would never have riden to work before and now do,
Poly, I didn't read anything on the original form but in the options for the end of the agreement is this sentence (If you choose to return the cycle, there will be a handling fee of £250 that will be deducted from your net pay in June).As said it makes no odds as I am keeping the bike.
I know...not sure why it does, but it does...and for some reason I can't keep my gob shut about it on this thread...so feel free to ignore my rants...I'm not entirely sure why it is bothering me so even more confused as to why I need to share this with anyone.
**Update**
Well, that seems to be sorted.
It wasn't an attempt to fleece money, more like general lethargy and no-one bothering to look into the alternatives to applying the adjusted market valuation.
Pointed out to them the various options and costs etc. They seemed especially concerned about the potential to make profit from users of the scheme, agreed that that was not what they wanted. Going to sell the bike to me for 5% of its value, I will incur taxable benefit. Not as good as extended lease but better than previous offering! Future users or the scheme will have the extended lease option.
All sorted out quite easily so panic over.
Now that I'm clear of this years scheme I'll need to start thinking about that carbon road frame I fancy fiddling through the next one 😉
What is annoying is the way the rules changed for many people just as they were reaching the end of a B2W scheme. And as someone else pointed out they ended up paying a big chunk in one month because many payroll dept's just applied the rules as they saw it.
In my case because of delays in processing I ended up paying £100 more for the bike I was after as I ended up having to have a 2011 model.
Then the really galling bit was to be told if I had just walked off the street when I first enquired, I could have got the 2010 one I wanted with 30% discount and 12 months interest free.
Going to sell the bike to me for 5% of its value, I will incur taxable benefit.
A-ha! I wondered if this was possible, so basically you pay 5%, and are then taxed on the taxable benefit, i.e. on the bike you've just been given, yes? In which case, how much do they assume the taxable benefit is worth, do they still apply HRMC's 25% fair market value?
I kind of wished my employers had gone down this route, if only so that I could [s]rip the arse out of the scheme again[/s] have bought another £300 commuter, instead of waiting 31 months.
13fm. Tax should be payable on the difference between the FMV and the "sale" price. So, for a standard rate tax payer using franksintras example, that would be 20% of 20% - i.e. 4% of the value of the bike. Of course, a higher rate tax payer will pay more (the only part of the scheme which favours the lower paid).
Taking a £1,000 bike, for a std rate tax payer getting no VAT or NI saving, that would result in a net saving of £110.
For those still interested, this is how the new numbers worked out.
Employer sold the bike to me at 5% of value
Bike £851.06 (£1000 - vat) x 5% = £42.55 plus £8.51 vat = £51.06
HMRC valuation was £255.21, therefore taxable benefit is £204.26. I will pay 20% of that amount in tax, it will be applied as adjustment to my tax code.
You don't actually have to pay *ANYTHING AT ALL* for the bike according to the tax man. They just want the tax on 25% for the original RRP. Most employers just see 25% and decide to charge that.
What NBT says, I'm waiting to see what my employer does and how I can point out their error if they use the cop out of 25%.
Can someone explain to me why cyclescheme don't have to pay my employer the fair market value of my bike when the ownership is 'transferred' to them at the extended hire period? Why can't my employer 'transfer' it to me instead!?
I feel like I have been ****ed in the arse
we have been given three options at end of hire period:
Option 1 - for 10% of the voucher price (should be a flat rate as it is an admin charge... but hey) extend the hire period for a further 54 months
Option 2 - pay a value to take title based on HMRC value tables
Option 3 - Give bike back to employer incurring a 10% of voucher value for the admin charge
or....
‘If we do not hear from you by this date we are obliged to report the bicycle and equipment as a benefit in kind to HMRC’
i think i'll just let them report it to HMRC....
My employer has stopped the 'bling to work' scheme after Inland Revenue got sniffy about it.
A better way to encourage cycling would be to drop VAT from all bikes and accessories below say £1000. I'm sure that this would be cheaper for the government to administer, benefit more than just the big retailers who cash in on the current scheme, and not be subject to all the nonsense about nominal resale values.
yer think our scheme will stop - shame it took 4 years of badgering to get in the first place.. across two intakes over 700 people signed up..
to be fair a large proportion actual use their bikes to get to work and many of those were non cyclists to start with
I honestly can't believe some of the sanctimonious drivel on page 1 spouted by some about C2W schemes in general.
Bottom line is that it was something that some people could previously take some benefit from. However, in it's current form, those benefits have been degraded to extent that it is no longer sufficiently beneficial and should probably be scrapped IMHO.
Please Dave, get rid of the government department that administers it. I don't want to pay their wages any more.
My view on the scheme is, If there is a benefit to you, take it. If not, don't.
If you want to flame me for feeling robbed, just like the OP, here's your chance:
I didn't need a new bike to cycle to work. I've got a perfectly good road bike for the few occasions that I do that but 40% off £1k spend was attractive.
The chosen scheme (another C2W, not Cyclescheme) was through a well known national chain and the vouchers were consequently accepted at only a few other independent outlets. I didn't want anything from that chain! I felt robbed!
I applied for the maximum in the hope that I could use it as part payment for something I really wanted. I knew that was specifically not allowed but I thought I'd be able to cut a deal somewhere. When I went to buy I found that the independent shop was receiving close scrutiny from the national chain and wouldn't consequently risk taking the voucher against a >£1k bike where they "may, allegedly" have previously done. I felt robbed!
... so I decided to buy myself a cheap £300 MTB that coincidently would be fine for another family member to use, and to spend the rest on spares and bits for me (set of Flows/Pro2s, SLX chainset, MW80 winter boots, spare ST Minions, chains, cassettes, etc). Basically picking stuff that was at a good discount anyway and factoring loyalty discount in too. When I went to buy the stuff I found the shop unwilling to honour web prices on the scheme, only selling at RRP. I felt very robbed! I don't think I've ever paid RRP for any single purchase over £100 in my life !!!
Still, 40% off meant it was worthwhile. Just not as worthwhile as it might have otherwise have been.
The change to the final market value (which I fortunately avoided) makes the scheme worth very little to me now. I won't bother this year.
<dons flameproof suit and stands back>
Pff. You pays your money, you takes your choice. Whining about not getting something for nothing won't get any sympathy from me!
Definately not whining molgrips.
I agree, you pays your money, etc.
<Edit> It was the sanctimony that hooked me </Edit>
E-T, if it's the well known national chain I think it is, they deduct 15% from the number on the voucher when it's redeemed with an independednt. Your shop will have got £850 in return for your £1000 voucher.
If that makes you feel any different about the RRP.
ned, I think we're on the same page. I understood that there was a hefty % fee to the scheme operator.
On balance, I don't [b]really[/b] feel robbed as I clearly benefitted from the scheme.
I think I must have been less than clear in the intent of my post.
I meant it to read as... you frustratingly loose lots of little bits along the way but if it's still worthwhile overall - then go for it, and if not - don't.
I looked at it at my old work when it came up. It clearly wasn't worth it because you had to pay over-inflated prices for all the bikes. I think it was being run through a third party company who were clearly on the make.
It's Britain remember...........did you really not expect to get shafted somewhere along the line !!!
we're with halfords here, yet to have a final payment come out (will be in the next couple of months). If they decide to take the 25% valuation, then a low rate tax payer will have paid (using £1000 as the example)
£70/month after tax per month (my company refuses to take vat off) = £833
£250 'one off' payment
==========
£1088
for a non-discounted £1000 rrp bike from halfords. works out as an APR of 15% (actually a little lower as £250 is borrowed for 12 months but the rest is borrowed for 12 months but being repaid, but its def over 10%)
Can't you pursuade your employer to do the 4 year deal thing? What do they have to loose? With my employer I'd complete the payments in a year then wait another 3 years before making the final payment which based on valuation would fall into the 'bottom bracket' (see what I did there) of 5%.
I would certainly use the scheme again as I'm not planning to change jobs just yet and it would be the best way to pay off the bike that I want. I would be less tempted to use the scheme if I wasn't happy in my job and I could pick up a good bargain.
Just hand back the bell. The rest of the bike was worn out and had to be scrapped for safety reasons?
Has anyone returned a bike at the end of the lease? With the new rules in place is there about to be an influx of 12mth old, hardly used £1k bikes onto the second-hand market?
And where will they sell them all?
It's not your bike to scrap - it's your employers. And most contracts I've seen have the onus on the user to maintain/insure it in the event of loss.
The whole scheme was dodgy from the start, the whole premise of people cycling to work was flawed, if it had been based on encouraging some of the purchasers to ride to work it would have been much more honest. Couple that with the fact it was all lumped onto employers to administer whilst the government got the kudos, the fact it was only open to you if your employer decided to take part and then the recent tightening up of the tax enforcement which had been always been pretty lax through customer and practice making people enter the scheme under false pretences. If a private company had sold using the examples Cyclescheme used and then enforced the small print that was in contracdiction of the sales patter trading standards and the courts would have been involved.
Typical government half baked scheme (like the home computer scheme) which will make it even less likely in future for people to sign up to this sort of initiative. An excellent concept right royally stuffed up by people who didn't understand the people they were supposedly helping.
I don't think the whole scheme has been dodgy from the start. We run and administer our own scheme, which has HMRC approval, and seem able to avoid all, or most, of the pitfalls those using a third party facilitator such as Cyclescheme encounter.
What has been wrong is the scheme was miss sold by these companies with particular regard to values at the end of the hire period. They inferred a 5% value was acceptable and can sympathise with people coming to the end of their agreements to find this is no longer the case. The HMRC rules always stated 'fair market value' and no value could be agreed at the start of the agreement. They haven't changed the rules at all - just provided guide values (which in reality are much lower than a realistic fair market value).
I'm with Coleman on this.
A 3rd party cycle scheme is a profit making business. If you want the best deal sort it out yourself.
http://www.singletrackworld.com/forum/topic/cyclescheme-queries
I think i_did_dab has a good idea. Proper discount to the end user, sod all in administration an no cheeky beggars creaming off a big slice of cash for themselves. i think the scheme was half arsed, they call it C2W but no-one checked if you did use it for commuting but then moaned when people bought play bikes with it. It was a half arsed, some people got out on bikes too which is good but I think that was probably secondary to be [i]seen to be doing something green[/i] and the aforementioned cheeky beggars who my cynicism says will have been pals of the government.
Oh and my C2W contract was definitley mis-sold to me, fortunatley it was years ago and I didn't get stuffed with the 25% thing. Certainly won't bother again.
@rootes1 - your end of hire conditions sound a lot like the pish set of options we were given - work for a large outsourcing company by any chance?
I had a major barney with HR about it, not least of which because they couldn't advise me at all on the scheme they chose to administer themselves over cyclescheme. every response I got was a c+p from their FAQ, but the point was the FAQ told us bugger all so thats why i was asking 🙁
The 10% to return a bike was ludicrious and whilst no-one in their right mind would take them up on it i pointed out it was patently unfair to hire something for a period and the have to pay to give it back - basically if you wanted to walk away it should have cost nothing, but they were making people pay more for the hire regardless.
I am still very tempted to push their button on the P11D and see what HMRC says but to all intents and purposes the company still own the bike so i presume they would report you and try to recover the bike too? The thing is if you add on the taxable benefit you'd end up paying RRP for the bike so i guess you could lose the lot.
The ultimate irony to all of this is that HMRC don't offer the scheme to their employees!
OK, it may be that I don't quite get it and apologies if my ignorance is showing here. My situation is as follows:
Joined cyclescheme voucher malarky. Got a bike worth £1,000. Broadly speaking basic rate taxpayer so should have paid roughly £55 for 12 months = £660 (i.e thats how much it "cost" me. I was also duped in that I believed (and yes I know this wasn't contractual) that a 5% balance would be due at the end (so £50). hence I receive a £1,000 bike for £710 total.
What actuially happened was that I left my employer after 1 month of going into the scheme. So i had paid £55. My employer then said I was liable for the full balance of the remaining 12 months with no tax relief (£83.33 x 11). Therefore the total I paid was £966.63.
I appreciate that this was in the contract BUT
Then at the end of the period, they ask me to pay either 25% (having changed the advertised /yes non conrtractual 5% to 25%)to own it which meant the £1,000 bike would have cost me £1,216!! Or the cheeky baskets say I can pay 7% of the value of the bike (on a £1,000 bike, I would have then paid £1,036) and I would not even own the bike!!
Surely the 25% and 7% should be on the value of the bike on which I have obtained tax relief, not on the value including where I have received no tax relief?!
Fully expect the usual "haha serves you right" answers but anyone who can provide a useful response would be gratefully received.
And yes, i did cycle to work
I'm afraid that that's how it works. If you leave your employer during the period, you can't get tax relief on the remaining payments, but you are still on the hook for them.
The 25% is on the value of the bike that you bought (including VAT), which, taken on its own is a reasonably low valuation for a 1 year old bike. You could try to persuade your employer to charge you less than this, and just pay the tax on the difference.
I'd be very interested to see how the 7% disposal fee thing is worded. One of the features of the scheme is that the hire period can't include any guaranteed provision for purchasing the bike at the end, so it'd be interesting to see how they word charging you 7% if they don't sell it to you.
You might reasonably question Cyclescheme on what basis a 5% balance was going to be an acceptable transfer fee (it's clearly not FMV) but given that they didn't and couldn't make any commitment to sell you the bike, it won't get you very far.
Ok, i'm also on the CTW Scheme - signed up last year in april (prior to the changes), bought a £1400 bike for £1000 as the bike shop were willing to sell there sale bikes on the CTWS.
i came to the end of teh hire period this april aware that the scheme had changed - however, like the OP i though it wouldnt apply to me as i singed up to teh 'old' scheme. looking back through the paper work i realised that this is not true - all thats happened is they have clarified the final market value section to the employers.
As it turns out i've been using my MTB (2nd bike - not on CTWS) for commuting more and more - as it gives me a chance to get out on it more. to the CTWS bike will be bought from my employer and then sold so i can free up some much needed shed space.
It'll work out at saving me about £510 over the 15 months of owning it (£1400 minus the £640is hire period and £250 final payment) and i'll get back £6-700 when i sell it on so i'm not that fussed.
I dont think anyone has mentioned in the previous 3 pages, that the 25% final 'buy off' fee reduses the longer you own the bike after the hire period - going down to 0% after about 5 yrs. Each month you own the bike after the hire period that final fee goes down by 0.416%. so my final payment will actually be around 23.75% of original voucher value (£237.50p).
A better way to encourage cycling would be to drop VAT from all bikes and accessories below say £1000.
Do you really believe the manufacturers wouldn't put up prices straight away to hit the same price points? 😯
Do you really believe the manufacturers wouldn't put up prices straight away to hit the same price points?
Do you really believe that it's not a competitive market? You've only got to look at the success of Boardman bikes to see that if you can sell a bike with better kit for less money, you'll do quite well.