Cycle to work scheme (sorry if this has been asked before)

Can someone please explain how this works (for both employee and employer) or point me to somewhere that I can read about it.

I am the employee and I am looking to buy a new bike before Christmas and my initial discussion with work are that they are happy to happy to support me. In fact the financial director says he might like to buy one as well.

Is there a maximum price?

How does the employer register?

Are all bike shops (independents as well) registered?

Thanks

No

Speaks to whichever scheme they want to join

No, but most take at least a couple of the different schemes.

I think your employer can just self administer if there are only 2 of you.

You would order the bike, let’s say it costs £600, from the shop. (All numbers below made up but they illustrate the point).

Your employer pays the bill so you now owe your employer £600.

They get that £600 back as a £50/month pre tax salary sacrifice deduction from your payslip each month over a year.

Your pre tax salary is £50 lower. But you would have paid £10 tax and £5 National Insurance on that £50 and so only received £35 of it. So you’re only missing out on £35*12=£420 over the year.

Your employer also avoids paying National Insurance (and pension contributions?) on the £50 each month so they also make a payroll saving.

Edit: but at the end of the year you don’t actually own the bike. You can normally pay a nominal amount to extend the ‘lease’ for another few years. Or pay more to purchase it outright, HMRC have a table setting out the % of original price to be used to value the bike.

Edit: what Bails said. I would add that I think the employer can recover VAT on the bike purchase, and would have to administer the final purchase of the bike by you (until that point the company owns the bike AFAIK).

Most scheme operators (Cyclescheme, Cycle Solutions etc) have a lot of info on how these schemes work on their websites as part of their “pitch” to employers.

My employer had an arrangement with Evans, which kinda limited options. Paul @ Cotic pointed me towards the Green Cycling Initiative and our HR/finance people found them really quick & easy to process everything. And I got a lovely Cascade 🙂

Rob

My employer a few years ago was not in a good place (Travel Co in Covid) so when I put in my request, and they had no limit specified.  I offered to pay up everything on their books in advance.  So no money sat on their books.  Worked a treat for me.

Everything above is correct.

There is no maximum amount in the c2w legislation. Avoid any scheme that has one, it’ll be rubbish.

The sign up procedure will vary by provider.

No, not all suppliers (bike shop) are on every scheme. But nearly all of them are on the good ones.

I always recommend the Green Commute Initiative. They appear liked by suppliers and employers.

As @bails says, your employer buys the package (you’re entitled to add things like lights, helmet & panniers but not computers). You then lease the package for repayments that add up to the purchase value of the package.

At the end of that period you can choose to purchase the package for an HMRC-mandated percentage of its value or extend the loan. This will take you to the point where HMRC determines it has no value any more, so you can pay a nominal sum to take ownership of the package.

There is a lot of guff spoken about needing to ride to work. The scheme operates on the basis that at least 50% of its use will be qualifying journeys. They include going to the shops and leisure at the weekend. The test is also deemed to be fulfilled unless there is evidence to the contrary, and your employer is not entitled to to go looking for it.

Happy to give you more details, but I’ve gone on long enough.

Thanks everyone

The Green Imitative has come up a few times.

My only concern is that on their website they mention a few times that the bike doesn’t belong to the employee. Is it possible to just but the bike on the scheme and then pay the balance immediately along with any final payment to make the bike mine rather than use the monthly salary sacrifice. I have to admit I am only considering using the scheme to save the money.

Is it possible to just but the bike on the scheme and then pay the balance immediately along with any final payment to make the bike mine rather than use the monthly salary sacrifice. I have to admit I am only considering using the scheme to save the money.

Bearing in mind that even after  12 months the cost to buy the bike will be 25% of the value. In the vanishingly small likelihood that you could buy it after 1 month then the residual value is likely to be at least 50% of the original cost. Resulting in you making a fat loss.

Why reinvent the wheel. Just go with the flow. Do you know anyone that knows of anyone that lost the bike as their employer took it off them? I don’t.

@gooner666

The cycle to work scheme (the tax mechanism) is set up so you don’t own the cycle. I recall the wording is “the employee doesn’t own the cycle and there is no expectation of ownership.” the reason for this is that it would count as a benefit and be taxable if you owned it.

That ownership bit is the price you’re paying for the tax benefit.

While there is the legal possibility of an employer taking the cycle back, I believe that part of the deal is that you have access to the cycle for the duration of the loan period. Aside from that, why would they do it? They just end up with an asset that’s deprecating.

If you’re setting it up from scratch, have a look at the gogetta scheme, it’s more like a prepaid debit card so you don’t have top buy all the kit at once. Just estimate how much you’ll spend on bike parts over the year and get a voucher for that amount.  They charge a substantially lower fee than the other schemes too so most shops will accept them and accept them on discounted items too.

If you’re setting it up from scratch, have a look at the gogetta scheme, it’s more like a prepaid debit card so you don’t have top buy all the kit at once. Just estimate how much you’ll spend on bike parts over the year and get a voucher for that amount.  They charge a substantially lower fee than the other schemes too so most shops will accept them and accept them on discounted items too.

That’s because they move some of the charges from the bike supplier onto the customer, so you save even less on your package. Not surprisingly, they are quite coy about that in their FAQs..

 The scheme operates on the basis that at least 50% of its use will be qualifying journeys. They include going to the shops and leisure at the weekend. The test is also deemed to be fulfilled unless there is evidence to the contrary, and your employer is not entitled to to go looking for it.

apart from commuting, errands such as shopping, and leisure purposes (which I guess would include fitness, fun, or practical purposes like riding to the pub), what other resaons are there to ride a bike that could possibly account for up the 50% of its use?

racing? as long as I train on my new race bike for as long as I race it for, I’m OK?

guess I cant put it on the turbo?

(no judgement, I’ll be looking to exploit the scheme in the near future myself, but this has made me chuckle)

That’s because they move some of the charges from the bike supplier onto the customer, so you save even less on your package. Not surprisingly, they are quite coy about that in their FAQs..

It’s right there in their FAQ’s,

6% of the total voucher cost but because it is added to the total salary sacrifice amount (and therefore you save the tax on the platform fee) the actual cost is between 3.2%-4.3% (depending on your tax band).

3-4% you could easily recoup with the flexibility to buy something when a PSA came up rather than on day 1.

Might not be optimal if you’re already with a decent scheme and know exactly what you want.  But a lot better than either the scheme tied to a specific shop or that retailers charge 10-15% to use.

In an unironic twist of capitalist deviancy Halfords/Trendz will actually add on those charges to any price matching.  So they charge you a fee, to cover their own flipping fee!

guess I cant put it on the turbo?

Turbo’s aren’t on the scheme so I guess not, and by that logic, any ride where you use a Garmin.  I don’t really understand why cycle computers are excluded, what if you regularly commute to different locations, I used to drive to site, park the van and then use my bike to get to the hotel and other sites for the duration of the contract, a Garmin would actually have been really useful!

“guess I cant put it on the turbo?”
Turbo’s aren’t on the scheme so I guess not, and by that logic, any ride where you use a Garmin.  I don’t really understand why cycle computers are excluded, what if you regularly commute to different locations, I used to drive to site, park the van and then use my bike to get to the hotel and other sites for the duration of the contract, a Garmin would actually have been really useful!

what I meant (slighly tongue in cheek) was, seems I can’t buy a road bike, then attach it to a turbo trainer (aquired elsewhere) – as that seemed to contravene the acceptable use cases of “commuting, shopping, and leisure”

what I meant (slighly tongue in cheek) was, seems I can’t buy a road bike, then attach it to a turbo trainer (aquired elsewhere) – as that seemed to contravene the acceptable use cases of “commuting, shopping, and leisure”

The forum really needs to bring smileys back, I was trying to be equally tongue in cheek.

Although i do think Garmin’s should be allowed.