I’d imagine that’s minimal if at all, once the commission gets taken the retailer is going to get very little

The commission is roughly the same (within a percent or two) of the charge for using interest fee finance. How many LBSs complain about that, or refuse to use it?

The peak discount is 62% if you’re earning between 100 and 120k, as that’s the rate of tax you pay, making a 4 grand sled just £1500

Apologies for only giving figures for the 99% of people who use it. 😀

How does the 62% discount work? The GCI calculator at £125k still kicks out a 42% saving?

How does the 62% discount work? The GCI calculator at £125k still kicks out a 42% saving?

Because people earning £100k plus like to bang on at every opportunity that there’s a bit of a dead band where you lose child tax credits, tax free allowances etc. And because they either don’t taper or taper steeply you pay ~62p on the 100,001’st pound you earn, but only 40p tax on the 120,000’th pound you earn.

Not so much 1st world problems as 0.0001th world.

See also:

More than half of Britons on £80,000 to £100,000 a year think they earn ‘about average’

It’s due to the gradual reduction of you tax free allowance from £100k I *think*

Edit, what TINAS said

Re the 100k thing, whilst I agree it’s a first world problem, it’s not *that* rare.

8% of households earn more than 100k and 16% in London. Obviously most of that will be two earner families. The top 1% has an entry of 120k ish and the top 0.1% is more like 400k plus (IFS numbers).

The number of people in this bracket will presumably increase as the threshold has been frozen since it was introduced and inflation is obvs running high. It is going to remain frozen for the foreseeable too.

As I say first world problem and to me it seems more sensible to put the 45% bracket to start at 85k or some other high number and then ditch the whole taper thing to stop all the tax avoidance that happens at 100k (such as using the c2w to reduce taxable income). Everyone I know on more than 100k reduces their taxable income to 99.9k using a combination of pension contributions and c2w in order to preserve the tax free child care and personal allowance.

The commission is roughly the same (within a percent or two) of the charge for using interest fee finance. How many LBSs complain about that, or refuse to use it?

Really? Someone flung 5-15% about further back, that looks a lot like mark-up and then some.

The third party schemes are easy for employers but aren’t ultimately that good for employees or bike shops. The third party schemes charge a commission (typically 5-15%) to bike shops so they have to absorb this cost, or pass this cost onto the customer in some cases

Really? Someone flung 5-15% about further back, that looks a lot like mark-up and then some.

How much do you think finance companies charge for using their services?

The peak discount is 62% if you’re earning between 100 and 120k, as that’s the rate of tax you pay, making a 4 grand sled just £1500

If you are going to argue against it, then get your facts right. Typically the figures are 42% and 32%

If you are going to diss someone for not getting their facts right, then get your facts right. 🙂

Edit, never mind

8% of households earn more than 100k

i would imagine a high percentage of that is from 2 or more incomes

The very next line….

Obviously most of that will be two earner families.

God I’m sooooo bored:-)

Edit. Never mind too 🙂

Apparently the highest marginal tax rate is actually over 70% and occurs between £50,000 and £60,000 if you have two kids under 16 and a student loan

I do love some of the virtue signalling and hand-wring from one or two people on this thread.

Yes, the scheme is less than perfect, it does benefit higher earns more than those who arguably need it more, but this can be said for many other ‘salary sacrifice’ schemes and initiatives, including childcare vouchers.

From my point of view – i pay enough tax to take advantage of a perk and still sleep easy at night…

As I say first world problem and to me it seems more sensible to put the 45% bracket to start at 85k or some other high number and then ditch the whole taper thing to stop all the tax avoidance that happens at 100k (such as using the c2w to reduce taxable income). Everyone I know on more than 100k reduces their taxable income to 99.9k using a combination of pension contributions and c2w in order to preserve the tax free child care and personal allowance.

bit off topic, but the reason this happens is because of the optics of someone earning £1m still earning £10k of it “tax free”. So they remove the allowance to avoid that.

the salary sacrifice thing works well, but only up to a point. eventually the writeoffs (posh bike (£10k?), tesla (max £3k) and pension – 40k minus whatever your employer tips in) run out and you’re back into the 62% rate again

including childcare vouchers.

childcare voucherrs don’t work like this, as the limit of what you can get tracks your tax rate (£250ish for 20% earners, £120ish for higher rate and maybe £100ish for 45% rate folks), so the maximum tax advantage (which you’ll be taking, as who only spends £250 on childcare a month?) is the same regardless of band (assuming you pay some tax)

regardless of the savings you make, the real win of the c2w scheme is when you can buy a new bike, ride it for a year, then sell it on for more than you actually paid for it (I did this with a halfords fat bike). Thus you’re actually being paid to have a new bike

childcare voucherrs don’t work like this, as the limit of what you can get tracks your tax rate (£250ish for 20% earners, £120ish for higher rate and maybe £100ish for 45% rate folks), so the maximum tax advantage (which you’ll be taking, as who only spends £250 on childcare a month?) is the same regardless of band (assuming you pay some tax)

Yep, you’re right, they changed it a few years back, i was on the original scheme which enabled 40% savings..

regardless of the savings you make, the real win of the c2w scheme is when you can buy a new bike, ride it for a year, then sell it on for more than you actually paid for it

This is pretty much spot on – i sold my 2017 Arkose for £550 earlier this year, the ticket price was £999 when bought through C2W, so i paid about £600 or it… £50 depreciation isn’t bad for 5 years hard use.

So, my pal who earns double my wages is also able to buy a shiny new bike every year with a massive saving.
Which he never rides to work or has any interest in riding to work. Our company doesn’t/wont do cycle to work as technically we all work from home.

I also am led to believe part of the cycle to work cost is paid by the retailer’s and eventually customers who aren’t lucky enough to be in this scheme.

On the upside I get to ride my fully self financed bike more as I don’t do as many hours. Also I get paid the moment I get in my Van, so no travel costs. So fair enough.

Last I looked at Bird’s site for said better off pal, they charge a percentage depending on what scheme is being used rather than the other customers paying for the tax dodge. Which seems fair

Really? Someone flung 5-15% about further back, that looks a lot like mark-up and then some.

The subsidy rates that retailers have to pay finance companies for interest free credit depends the term and amount of the loan, but are typically around 9%. Sometimes less, sometimes more.

Cost isn’t the only consideration. The cycle to work schemes are usually more of a ball ache to administer for the bike shops. Most of the big finance companies have relatively easy to integrate web platforms where the customer can sort the finance themselves online via a button at checkout. They just need to ship the order and they’ll be paid automatically. Much easier than going onto one of potentially many scheme providers portals/emails and manually redeeming the voucher.

It’s a good point though – bike shops have to pay to receive money weather that be card processing fee, C2W voucher, or finance subsidy. Some just think the C2W juice ain’t worth the squeeze.

The subsidy rates that retailers have to pay finance companies for interest free credit depends the term and amount of the loan, but are typically around 9%. Sometimes less, sometimes more.

I didn’t know that, I always assumed the cost to the shop would be negligible or at least baked into the ticket price. I assume then it’s the latter.

I do love some of the virtue signalling and hand-wring from one or two people on this thread….

…From my point of view – i pay enough tax to take advantage of a perk and still sleep easy at night…

Tell me you’re a tory without telling me you’re a tory.

As long as you’re okay eh?

regardless of the savings you make, the real win of the c2w scheme is when you can buy a new bike, ride it for a year, then sell it on for more than you actually paid for it (I did this with a halfords fat bike). Thus you’re actually being paid to have a new bike

Oh yay, another advantage of being rich.

FWIW I’m well into the higher earner tax band so before anyone accuses me of ‘politics of envy’ or some bollocks you couldn’t be more wrong. I just find it completely arse backward and of no benefit to the majority of society. I don’t think it’s virtue signalling to say that writing a hobby off against your tax bill is morally wrong, doubly so if you’re then going to profit from it.

Well in that case the only option is to call you a hand wringer <goes off further up the thread to see if it’s spelled with a “w” or not>

HAND WRINGER!

(PS I completely agree with you)

regardless of the savings you make, the real win of the c2w scheme is when you can buy a new bike, ride it for a year, then sell it on for more than you actually paid for it (I did this with a halfords fat bike).

When was that?
There was a period when you could pay for a bike for a year and then buy it off the company for a “fair market value” of bugger all.
However HMRC got bored and there was a court case where they successfully argued that “fair market” value should bear some resemblance to reality.
Hence the schemes got changed to paying for one year (sometimes two) and then a further 2-4 years for the market value to drop to zero. So depending when you did it in theory you possibly sold a bike belonging to someone else.

I wouldnt be surprised if it does get killed off soon. There was a similar scheme years back for computers which also hit the obvious problem it was just a nice tax discount for the better off.

Typical UK govt. Implement an expensive scheme which not everybody can benefit from and make it complicated.

If they wanted to boost cycling make bikes VAT free. And if it was to encourage transport/commuter cycling rather than high end sports make bikes under say £1500 VAT free.

Anyone would get the same benefit unlike now where higher taxpayers get higher benefit.

Typical UK govt. Implement an expensive scheme which not everybody can benefit from and make it complicated.

If they wanted to boost cycling make bikes VAT free. And if it was to encourage transport/commuter cycling rather than high end sports make bikes under say £1500 VAT free.

Anyone would get the same benefit unlike now where higher taxpayers get higher benefit.

I used to be with you, but I think I’ve had a change of heart – mainly because the saving, and therefore UK government subsidy, is more on a very expensive bike than a cheap bike. I know it’s a bit more expensive but if it was a replacement for the cycle to work scheme I’d want it to focus on bikes typically purchased for biking to work….and the shops etc. Now I know some knob will be along in a minute and say that you can do that on a 200mm DH monster or their commute to work is 99% off road and they ‘need’ a downcountry bike to do it. But I’d have a scheme where manufacturers could apply for a ‘cycle to live’ endorsement. That makes the bike VAt exempt for the first £3K in value and access to a repayment scheme. It would be like at the opticians with the NHS frames – they might not be the coolest bikes but they are great utility and if you want something more jazzy you’ll be paying for it.

The attractiveness of c2w is not the cost though, it’s the sense of a bargin. If all bikes were 20% cheaper I’d buy the same bikes as otherwise. However if I can personally get a smashing deal on a bike that doesn’t appear available to others (and is free over a couple of years), it’s a win and I’m buying it

However if I can personally get a smashing deal on a bike that doesn’t appear available to others (and is free over a couple of years), it’s a win and I’m buying it

You’re not helping your case, you do realise that don’t you?

Maybe what we need is some finese here? Should the bike types be somewhat limited. Who needs a 4 grand TT bike to go to work or a similar full suss MTB. Virtually no one. Who needs any expensive bike to ride to work? No one. Alright moped/ebikes need a higher threshold.
Thing is, if we just take the VAT off people will just not buy. it is the ease, the “hidden” pay reduction etc that makes it attractive.
Should be a governement run set up, no finance company etc.
Also wouldn’t it be nice if it could be enforced? Maybe proof of actually using it for work from an employer or a GPS track etc.
Meh. Like anything to help the environment it is buggered as we all do our own thing in preference.