Wasn’t aware of this fee on the missus cycle to work bike, but not sure I can see any valid reason to go for the £210 option, vs just paying the £70 with same end result?

The £210 nearly wipes out most the tax saving on the £1000

Cheers!

Long as she’s not going to be leaving employment with them any time soon I don’t know why you’d pay to “own it now”.

Probably would have saved more buying something in the sales.

I selected the own it later option. And will do again when my latest purchase finishes.

I got an already discounted bike the first time, then some items that really don’t see any discount the second time.

It’s a smaller % fee if you keep it below £500 too, so accessories can work out to have a reasonable saving and only a small monthly cost.

This is why C2W is now largely pointless.

When I last used it (over a decade ago) they’d not quite got their eye in, and I paid a final fee of £50 on a £500 bike after 12 months, without the delayed period of “rental”. That pretty much negated any savings I would have made.  They still don’t seem to make it clear to participant’s what happens at the end of the rental period…

These days c2w seems more like another “tax efficient” salary sacrifice wheeze for the mid to high income bracket lot… I’m not sure it’s about getting anyobe cycling to work anymore.

OP I’d love to see what happens if you choose option 3, and just hand it back. The outfits running these schemes now really don’t want the things back, they’re basically just providing a finance product.

But the obvious answer is option 2, £70 and string the tax man along for another 3 years…

Reason it came about was a few years ago HMRC decided people were taking the piss a bit too much with the scheme. It was always meant to be that you “hired” the bike for the period and then had the right to buy it at a fair market price.  Key word being “fair.

However what was happening was the fair market price was determined to be bugger all. So the crackdown occurred with HMRC providing specific guidance on what it would be for age and cost of bike.

This was met by companies going pay for the bike over 1 year and then have it for another 3 (for example) so the price would drop to a pretty much nonexistent amount.

I havent seen this specific variant before but then havent been heavily involved in it for a while. I would guess the difference is with the buy now option you would be able to get a new bike immediately on the scheme whereas with the other one I think you wouldnt.

Cheers guys, £70 it is 😀

She barely noticed the money out of pay so guess it served its purpose.

I treat it as sightly better than 0% finance. Shop wisely and you’ll do ok.

Exactly, it’s still an a interest free loan, with a teeny bit of tax benefit.

Seems every one wants things almost free these day’s.

It’s designed to get people on bikes who might not nessesary buy one because they don’t want to take out a loan or get finance or buy a £99 argos BSO and to that extent it’s still a great scheme.

The £70 is essentially a nudge nudge wink wink say no more scam to give you the bike. Your company couldn’t give a toss and the c2w lot don’t want it back either. It just keeps the taxman happy. Anyone who pays the higher fee is a Muppet.

 It was always meant to be that you “hired” the bike for the period and then had the right to buy it at a fair market price.  Key word being “fair.

Nope, the guidance before was very much less than the market value plus you got vat deducted. This was the intent, to offer a deliberate loophole to encourage cycling to work. HMRC then of their own back changed the interpretation of the vat and market value parts of the deal making it much less worthwhile.

Exactly, it’s still an a interest free loan, with a teeny bit of tax benefit.

For a basic rate tax payer it’s a 32% saving. For higher rate tax payer, 42%. (Unless the company is using a finance company to fund it, making the savings probably 24/34% respectively).

The £70 final payment is based on a full £1k order. (It’s 7% of the original order value if that was over £500.) Even taking that into account you’re  probably still getting 25%/35% savings -hardly a teeny bit of tax benefit.

Also, most of the C2W providers are moving away from that final payment.

Peole who say that you can get a better deal in a shop just don’t understand the basics of the scheme.

Yup, my last 2 bikes have had no final payment.

I don’t know why people are so down on it, it’s a tax incentive that gets us cheaper bikes with the costs spread. My good lady picked up a lovely merida commuter yesterday, 600 quid, she’ll hardly notice 34 a month from her salary. Best the lbs would’ve given us on a cash sale would have been 10%, so C2W is cheaper and spread over the year.

Win win.

Probably would have saved more buying something in the sales.

Probably would have saved more buying something in the sales on c2w (which I can assure you is an option with some retailers).

Yup, my last 2 bikes have had no final payment.

Same, my Arkose was free to keep until it’s worth nothing under the Evans extended ownership scheme. Not sure if they still do it, but has meant my £1200 bike cost me about £600.

as a point of interest, what happens to the returned bikes?

OP I’d love to see what happens if you choose option 3, and just hand it back. The outfits running these schemes now really don’t want the things back, they’re basically just providing a finance product.

When I got my first bike through the scheme (2010) it felt like they tried to discourage this. I got the email about the market value payment and the cost of postage back to cyclescheme was much higher than the cost of keeping the bike (voucher of £800). A few people I knew at work that got vouchers around the same time felt the same way.

The reason you might take the early ‘own it now’ payment after 3 years (£300 on a £3000 voucher in our work scheme, I believe), is so you can get another voucher (….and thus buy a new bike) rather than wait another year until the bike is yours for a reduced payment and you are eligible for another voucher.  If you wait for 5 years the bike is yours for no additional payment, and you are eligible for another voucher.  £210 off a £1K voucher seems a bit steep?

These days c2w seems more like another “tax efficient” salary sacrifice wheeze for the mid to high income bracket lot… I’m not sure it’s about getting anyobe cycling to work anymore.

Pretty much, yes.  Gains are not so great unless you pay high rate tax.

@angeldust – I don’t think it works that way on our scheme. As soon as you’ve finished paying the salary sacrifice element you’re eligible for another bike.

@angeldust – I don’t think it works that way on our scheme. As soon as you’ve finished paying the salary sacrifice element you’re eligible for another bike.

So you can get a voucher a year?  Sounds pretty good.  So, no additional payments ever?

I only know the details for the scheme at my company.  You can get a voucher for up to £3K .  Salary sacrifice over 1 year in monthly payments.  0% interest, obviously.  You save 42% as a high rate tax payer.  After 3 years you have the option to own the bike by paying 10% of the voucher value.  Leave it until 4 years and it is 5% to own it.  After 5 you own it without further payment.  Reason for paying early is you become eligible for another voucher.  The primary purpose for the bike is supposed to be commuting to work, but this is not enforced in any way.

Yep, ours too jimdubleyou.

It is still a pretty good deal if you really want something that is unlikely to reduced significantly in a sale, and you are a higher rate tax payer.  Obviously, you maximise that benefit if you don’t make the final payment after 3 years, and hang on for 5 years.

Lots of shops will allow you to use it against a sale bike anyway, and allow you to top up the value (which officially I believe should not be the case).  Can’t use it for some direct only bikes though e.g. Canyon.

I only know the details for the scheme at my company.  You can get a voucher for up to £3K .

Yup – you can get a bike a year, but there’s only so much room in our garage 🙂

We recently changed over to cyclescheme (used to be Evans’ own scheme) but I think the limit is still £1k.

£3k sounds like a special deal – does your firm run the scheme itself? That might account for the “only one at a time” rules.

£3k sounds like a special deal – does your firm run the scheme itself? That might account for the “only one at a time” rules.

Not sure about that (I work for a big company, that is good at getting special deals though)!.  £3K limit certainly makes it much more valuable to me though.  It is a ‘cyclescheme’ voucher, but we do the admin direct from our company website.

Ours is 3k too, IIRC it’s because my co have a credit licence for the scheme?.

I don’t think it works that way on our scheme. As soon as you’ve finished paying the salary sacrifice element you’re eligible for another bike.

Exactly the same as mine, £1000 (before tax deductions) split over 12 months, after that the bike is mine. No final payment and you can get another voucher as soon as the final payment is made on the previous one.

Costs me about £55 a month (give or take) for a £1000, can’t grumble at that.

Just paid the final £60 on my 2013 bike. Next year would be free but I need a new TT frame!

Trust the inland revenue to work out that three year old Brompton is worth a bit more than 5% of purchase value. Our scheme has a £3k cap which I used last time. Then ran it down so the final price was almost nil

Oh and the hand it back processing cost is £100! I won’t be handing them a Dura Ace Defy SL though, it’s mine now, all mine.

Still a good deal for higher rate tax payers. The discount houses offering 0% on last year’s models are about the same value now, but the scheme is a lot more forgiving of purchase options. A HED G3+ front carbon triapoke wheel may be an accessory too far though.

Still a good deal for higher rate tax payers.

This really sticks in my throat – and I’m a high rate rate payer. Any scheme to encourage the general population to ride rather than drive to work that is of more benefit to middle management and beyond than those that really need the financial assistance to get riding sucks dicks as far as I’m concerned.

This really sticks in my throat – and I’m a high rate rate payer. Any scheme to encourage the general population to ride rather than drive to work that is of more benefit to middle management and beyond than those that really need the financial assistance to get riding sucks dicks as far as I’m concerned.

You save tax and NI on the scheme, so naturally if you pay more of that, you save more!

You save tax and NI on the scheme, so naturally if you pay more of that, you save more!

Well yes, obviously.

But there were plenty of other ways the government could have organised the spending of money effectively lost in tax. They could have made a contribution of £X or X% to every applicant; They could have made a contribution to every applicant in full time employment on income support; they could have given grants to businesses installing showers or bike storage to firms that had an interest free bike purchase scheme for employees. Loads of ways to better spend the money that would focus the spend on those that need it most or would have have better impact than a scheme to help some high rate rate payer buy a bike the they ‘may’ ride to work but should be able to afford regardless.

Steveb77

split over 12 months, after that the bike is mine. No final payment

That’s not the full story. You have received a benefit in kind which should be mentioned on your p111d or whatever it’s called.

If the tax man does investigate you then you’ll have a bill to pay

That’s not the full story. You have received a benefit in kind which should be mentioned on your p111d or whatever it’s called.

If the tax man does investigate you then you’ll have a bill to pay

I doubt it.  Steve’s scheme probably run their own end of scheme arrangements which don’t require anything to be declared to HMRC. Pretty much every scheme does this.

Also agree with convert that it is grossly unfair that high rate tax payers get so much greater benefit from the scheme.

That’s not the full story. You have received a benefit in kind which should be mentioned on your p111d or whatever it’s called.

If the tax man does investigate you then you’ll have a bill to pay

I doubt it.  Steve’s scheme probably run their own end of scheme arrangements which don’t require anything to be declared to HMRC. Pretty much every scheme does this

This

Also agree with convert that it is grossly unfair that high rate tax payers get so much greater benefit from the scheme.

I put some basic figures into the cyclescheme calculator and it works out the higher rate take payer get an extra £100 benefit (as the NI savings plateau).

This would seem to be in line with both tax bands receiving broadly the same percentage benefit based on tax paid.

In the grand scheme of things HMRC does to screw people over, I don’t think one this counts as grossly unfair.

Also agree with convert that it is grossly unfair that high rate tax payers get so much greater benefit from the scheme.

But also pay a $h!t load more tax & NI than a lower rate person, swings & roundabouts innit

But also pay a $h!t load more tax & NI than a lower rate person, swings & roundabouts innit

We pay a shit load more because we can afford to do so. C2W isn’t meant to be a gratitude reward for being good little earners. It’s meant to be a way of spending a dollop of the country’s income getting more workers to choose a bike rather than a car. Favouring high earners is plainly not the most effective way to do this. I would feel excruciatingly embarrassed to go to the bike shop with one of our cleaners and effectively walking away from the shop having paid less than her for the same bike.

I would feel excruciatingly embarrassed to go to the bike shop with one of our cleaners and effectively walking away from the shop having paid less than her for the same bike.

Do you feel embarrassed that the government contribution to their pension is less than yours too?

Do you feel embarrassed that the government contribution to their pension is less than yours too?

A little bit yep. I’m on an average salary scheme which muddies the water slightly (especially as the more I earn the higher the percentage of my annual wage I have to contribute) but yes, it does feel unfair.

C2W feels very immediate though. A nice little perk with an extra cherry for the wealthy when it could have been so much more.

Steve’s scheme probably run their own end of scheme arrangements which don’t require anything to be declared to HMRC. Pretty much every scheme does this

Utter nonsense. Pretty much every scheme does not do this. They do one of various compromise workarounds that fit in with HMRC’s rules and recommendations. Those rules categorically do not include:

after that the bike is mine. No final payment