- This topic has 27 replies, 18 voices, and was last updated 11 years ago by Kamakazie.
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Cycle to work scheme
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scrambledegFree Member
Anyone used it and if so is it worth doing.
Any pitfalls to avoid ?thanks
victorspeedboatFree MemberIf it’s the Halfrauds run scheme then there are a couple of things to note;
Bike shops that are not Halfrauds are charged an admin fee to use ‘their’ vouchers – the bike shop will inevitably have to pass this cost on to you as an initial outlay (so they don’t lose money on the deal).
The Halfrauds scheme seems to incur a higher ‘admin fee’ than the other schemes (unless it was just the bike shop I used taking liberties)
You will not get your Halfrauds ‘freebies’ (a percentage of the overall value of the bike purchased) if you do not get a bike from Halfords 😐However, it’s a good alternative to getting a bike on tick and the best bit is that it denies the taxman of a small amount of your wage.
Small pleasures.
scrambledegFree MemberI am hoping to talk my employer into avoiding Halfords.
Bike2workscheme.co.uk
Seem to deal with most of the independent bike shops in my area, but there is another alternative to them that I could use.Are the savings as real as stated, ie, up to 40% of the purchase price?
polyFree MemberRecent changes mean it is now not regarded as the great deal it once was. That said it is still an affordable way to buy. It still favours higher rate tax payers more than those who could perhaps do with the help buying a bike.
Pitfalls to be aware of: salary sacrifice can have a small effect on any maternity pay, redundancy etc which are calculated as average of last XX weeks pay. Not everyone operates the same “end of scheme” payment approach you need to understand your company’s approach not some internet generic info. And if you buy the best value for money bikes in the price range you’ll probably end up with a boardman and people here will disown you for not being niche enough…
scrambledegFree Member🙂
I have never been a Boardman fan, (bikes I mean, Cant argue with his achievements)
I used to Love Mongoose but fallen out of love with them. I have now started waking up in cold sweats over Orbea after buying one for my lad!Yes it would appear I am jealous of my son’s bike!!!
KamakazieFull MemberStill very good value unless you can find a 2012 bike that suits for 35% or so off.
It used to be ridiculously good though as if I remember correctly you could even save in the VAT.
fandangoFree MemberIt seems the “end of scheme” payment is the crux if the thing. My employer is currently looking at Cycle Solutions by Wheelies. Unfortunately, it is far from clear what the final payment will be.
martymacFull Membermy company used wheelies, they are fine.
i will have 2.5 years where i am loaned the bike, then they ‘may’ sell me it for about 70 quid if ive done my sums correctly.
tbh, my advice if you have some cash is to shop around for a deal on a 2012 bike.collinstiffeeFree MemberYou won’t get 40% anymore. HMRC ruled on a different salary sacrifice scheme two years ago that VAT must be charged on deductions. They then decided to apply that ruling applied to cycle to work. Then we have the final payment using the sliding scale of percentage worth. You can still save money but it’s a bit misleading how much.
kitebikeskiFree MemberWe’ve always done it ourselves at work. Done over a longer period – 3 years the bike depreciates more, then I get a loan of it for a year or so before I have to make the final payment. Seems to work for us.
woodlikesbeerFree MemberIn all cases you loan the bike from your employer. If you want to own the bike you need to transfer ownership. We calculated that after 5 years we’d save 5%. But my company cannot claim back VAT. Given the minimal savings, the amount of paperwork and the interest free loan already offered by my company we stopped running the scheme.
You really need to find out what the final figure will be including the transfer of ownership will be. Plus bear in mind that if tax law changes (as it has already done so for C2W) you have to follow the latest set of rules.
CragFree MemberHave a look at the thread I started a few months ago on the very subject.
http://singletrackworld.com/forum/topic/talk-to-me-about-cycle-to-work-scheme
By setting up the scheme ourselves, we now have a couple of people in the scheme who have shopped around for sale bikes and then set up credit agreements with the employee concerned.
I ended up getting a Cannondale Caad8 road bike reduced from £1050 to £800. I reckon by the time I’ve finished my payments and done the final payment (which I still haven’t really decided when and how much!) it will have cost not a deal over £500.
Key to the savings is administrating the scheme in house (see Harry’s post on where to rip off the agreements from) so you can shop around for the best deals and having a management team in place who are willing to run with it. Outsourcing to one of big guns just makes it a bit of a non-starter imo.
pdwFree Member+1 for what crag said.
Run it in house so you can buy what you want from where you want. Set up right you can still get around 35% savings for basic rate tax payers, and 43% for higher rate. Don’t forget that you employer will be saving employers NI contributions on your salary sacrifice, and there’s no reason why they can’t pass that saving on.
projectFree MemberAs the fellow cyclist on the train into liverpool this summer found out, stolen or lost bikes are not insured by the bike shop or cycle to work scheme, and if lost or stolen they will still need to be paid for.
So there was no need to rant at us fellow cyclists about what you where going to say to the shop ,when they wouldnt give you a new bike.
Make sure you insure your bike.
mindmap3Free MemberI’ve just bought my Allez through our scheme (Cycles scheme) and the saving sees to be ok. Due to the parking levy I was gong to have to fork out for a raking space when my secondment ends, do I figured I’d ride to work and buy a bike with what I’d ave to pay for a space. At least this way I’ll have something to show for it!
It’s certainly not as good as it used to be. Ours is capped at a grand but can be used in most shops.
nutsnvolksFree MemberI got mine on cycle scheme, it has worked out much cheaper, the bike shop I used supplied a end of year bike that should have been 2200 for 1600 plus they let me add a fair few accessories such as dropper post and just bumped the price of the bike up (as they arnt allowed to supply those types of accessories on the scheme) plus loads of other bits, all in it was just shy of 2K and has cost 12 months at 80 quid a month, final payment was £137 last month and that means that I have effectively hired the bike for the next 3 years, after such time I will own the bike! So a good saving on the scheme 🙂
fandangoFree MemberCyclescheme so seem to offer the extended loan period for a small cost in order to reduce the (larger) “fair market value”. This seems to maximise the financial benefits.
@martymac, nice to hear a similar proposition may be on offer from Wheelies, otherwise by reckoning I would only save £50 over a £1000 bike…
KamakazieFull MemberI don’t think savings are particularly difficult to determine with Cyclescheme.
They have a calculator on their site which gives you an idea of how much you pay monthly over the 12 month initial agreement period, then they state a percentage holding fee that “extended” hire will cost (2 year hire) and also state that at the end of the extended period, they may offer to sell you the bike in exchange for the non-return of that holding fee.
The % holding fee is determined by the value of the bike and is, iirc either 3, 5 or 7% (2 of these 3, not sure which) of the bikes purchase value.vincienupFree MemberI started looking at this and definitely +1 to asking for worked example from your employer that includes the final payment.
I gather there are strategies (like more than one year) to get the final payment down by depreciation. I think that it used to be pretty much up to the employer what they did about a final payment but HMRC has ruled on a big chunk of market value (hence the multi year get round) now.
I started talking to local shops and found one particularly forthcoming salesperson who said that before we could really talk he needed to know which scheme we were using at work- the shop has to cope with admin fees for the scheme which are transparent to the buyer (you) but make a hole in the shops’ margins apparently. Apparently this is more an issue if you’re trying to pickup a bike already in a sale rather than one at regular price.
Once you used to be able to do odd things like top up the amount and have 1k on the scheme and pay a lump extra for a better bike. This is not strictly doable anymore – it causes trouble with the idea of the employer not owning the whole bike to sell to you… Unless your Company have a Credit license (ie are licensed to make Credit Agreements with the public) the scheme is capped at £1000. This may be different if a 3rd party is running the scheme for your Company. But they will still need s license.
Upgrading components before its really yours is a potential headache too. Keep anything you take off…
I’m going to be taking a very close look in April when our c2w scheme starts up again. From what I read, it’s probably better approached as cheap credit than big saving now thanks to the changes that have been made.
I have heard (don’t have anything to back this up) that the best deal for a standard rate taxpayer is probs on about £500 worth of bike if going c2w now rather than maxing it.
polyFree Membercollinstiffee – Member
You won’t get 40% anymore. HMRC ruled on a different salary sacrifice scheme two years ago that VAT must be charged on deductions. They then decided to apply that ruling applied to cycle to work. Then we have the final payment using the sliding scale of percentage worth. You can still save money but it’s a bit misleading how much.Emmm, surely a higher rate tax payer would still save 40% though?
e.g. Bike costs £800+vat = £960.
Salary sacrifice £80 per month (inc VAT) over 12 mths
High rate tax payer would have paid 40%, (and ~2% NI) on the sacrifice – so actually pays £46.40 per month in real money. * 12 = £556.80So saving £403 (42%)… before the final value payment.
vincienupFree MemberDid a quick dig and found this on BikeRadar. It has a table of HMRC approved final values.
Basically, for a bike worth more than £500 that you are paying over a year, the Final Market Value will be 25% of the original price, so £250 lump at end of a year on a 1k bike. This would take a big chunk out of your £403 saving in the above example. Some employers used to just give you it or charge one final month at the end which is where the super savings really were. The new final value approach makes a mess of things.
Bikeradar reckon that depending on the exact implementation you might save 16-40% but I’d get in writing rather than trust anything you read here, there or anywhere else. It’s a credit scheme and it takes a chunk out of your pay to get you a new bike a bit cheaper than you might have got it yourself.
http://www.bikeradar.com/gear/article/guide-to-the-uks-cycle-to-work-scheme-18360/polyFree MemberDid a quick dig and found this on BikeRadar. It has a table of HMRC approved final values.
Basically, for a bike worth more than £500 that you are paying over a year, the Final Market Value will be 25% of the original price, so £250 lump at end of a year on a 1k bike. This would take a big chunk out of your £403 saving in the above example. Some employers used to just give you it or charge one final month at the end which is where the super savings really were. The new final value approach makes a mess of things.
Bikeradar reckon that depending on the exact implementation you might save 16-40% but I’d get in writing rather than trust anything you read here, there or anywhere else. It’s a credit scheme and it takes a chunk out of your pay to get you a new bike a bit cheaper than you might have got it yourself.
http://www.bikeradar.com/gear/article/guide-to-the-uks-cycle-to-work-scheme-18360/That is only one model for dealing with the final value. Other options include:
– company continues to lend you the bike FOC indefinitely, you never own the bike and if you leave you should (technically) give it back. Could be an issue if you wanted to do a ‘second’ one in year 2 etc.
– company transfers ownership to cycle scheme and they then lease you at a notional value for 1 or more years and then further reduced transfer price etc.
– company gives you the bike and you pay TAX on the valueYou can’t get the final bit in writing it is against the HMRC rules as otherwise it becomes Hire Purchase.
scrambledegFree MemberThanks everyone, Crag especially,
It would appear that a self run system offers the best savings to the employee.
And if I read the weight correctly, not really worth bothering with if my firm opt for outsourcing to and admin company, unless I get a large pay rise to lift me into the higher tax bracket!Jeez what a ball ache!
KamakazieFull MemberUrn even as a basic rate using cyclescheme it is more than worth it unless you can get a sale bike instead. You still save at least 25% from what I can tell.
somafunkFull MemberPerhaps a very stupid question but if you don’t earn enough to pay tax can you still get a bike on the cyclescheme?
bryan-g-Full MemberI am on my 4th bike from cycle to work, a Cube, Specialized, Focus and Canodale . I work for Strathclyde Fire and Rescue who do it through Halfords and I have never had a Halfords bike. They can get pretty much any bike you want, I think they use Leasure Lakes , Alpine bikes and a few others so they never get their grubby little paws on them. They don’t cost anymore through Halford than buying them direct.
EuroFree MemberUpgrading components before its really yours is a potential headache too. Keep anything you take off…
I sold the forks on mine within a month 😀
My first year was up not so long ago, and I opted to extend the scheme with C2W – not my employee for a further 3 years (this was always my intention). It’s the cheapest way to buy and it cost me a further £72 to do this, but he bike will only cost me £20-30 to own outright at the end of this period. I maxed out the 1k limit and added a few hundred to it to get the bike I wanted (from On One). All things considered, I saved around £300.
p.s. It will never be used to cycle to work 😆
KamakazieFull MemberSomafunk, I’m not sure but I don’t see why you would want to? Better off buying s discounted bike on finance I would have thought. Especially if anyone is offering interest free.
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