Cyclescheme having a laff

Viewing 32 posts - 41 through 72 (of 72 total)
  • Cyclescheme having a laff
  • Wolfenstein if in doubt, get your accountant/accounts people to have a look at it at work. they should be able to give you the exact figures for yourself based on what agreement you’ll have between them and also your salary.

    Everything else from us all on here is variable.

    Premier Icon Daffy
    Subscriber

    In short, and over a 12 month period, if you’re a lower rate tax payer, it’s just not worth it anymore.

    Yet another perk which favours the wealthy.

    mk1fan
    Member

    Tax dodgers beware – I would have read the small print.

    FTFY

    fr0sty125
    Member

    I think it is still worth it.

    I’ve used the scheme but my mate at work got the best deal.

    The bike cost about £450

    He is higher rate and had NI reduction so that is 52%

    So after 12 months he had paid about £216

    He then paid a 3% deposit £13.5 and extend the lease for 3 years.

    So effectively he will have paid for £229.5

    Oh and we run the scheme ourselves instead of using the money grabbing cycle schemes that skim 10% just as bad as letting agencies and their fees.

    [EDIT]

    Even for me I got a good deal list price for bike at LBS £850

    Knocked off 10% list price of the bike because we don’t use money grabbing cycle scheme. I got a load of stuff to go with the bike total voucher £900.

    I’m only lower rate so 20% income tax and 12% NI

    total of %32 so after 12 months I’ve paid £612 then pay £63 deposit for the three year extension.

    Total cost £675

    Euro
    Member

    wolfenstein – Member

    So in laymans,laymans term .. If my tax is 20% .. My savings for a £1000 bicycle is 20% ?

    Almost. You save a bit more than just 20% when you take in NI contribs too. But this is offset when you factor in any charges (7% on a £1k bike) for hanging on to the bike for 3 more years. I’d say you are closer an 18% saving on a £1k bike, which may or may not be worth it (i thought it was btw).

    Premier Icon jamiep
    Subscriber

    £1000 would cost me £680. Plus £250 buy at end. But because I want the P-X carbon cross bike, also add £100 admin fee.

    = £1030 sad face

    Premier Icon D0NK
    Subscriber

    Not if you are P-X, who helpfully pass it on directly to the ‘customer’ at the point of the ‘hire’

    pretty sure I’ve heard of other retailers saying “C2W? oh, in that case the price has gone up” which is kinda understandable if they take a 10% cut. Plenty of places will do you a 10%ish discount giving another 10% to C2W isn’t going to work is it?

    Isn’t this the employer? I just asked my boss if I had to pay anything at the end of the scheme and got a “Nope”.

    don’t a lot of companies have nothing to do with it and everything gets deferred to a C2W agent who generally won’t let you off?

    fr0sty125
    Member

    jamiep – Member
    £1000 would cost me £680. Plus £250 buy at end. But because I want the P-X carbon cross bike, also add £100 admin fee.

    = £1030 sad face

    If you could get your company to run it’s own scheme then no need for £100 admin fee and if you just extend the lease then you only have to pay 7% £70 not £250

    That’s £750

    Premier Icon aracer
    Member

    eskay wrote:

    My company gave the bikes to us (this is current as the scheme has only just ended). We just had to pay the taxable benefit.

    Given the calculated tax cost, why don’t more companies just do that instead of all the other complicated stuff? Seems the best solution for all concerned.

    faustus
    Member

    The main thing for me is the status of the bike at the end of a year and beyond, which for me diminishes the saving further.

    This depends on the company of course: but at the end of the first year, getting the option of an extended lease means you still do not own the bike, right? Our company offers this, for a tiny fee you continue to use the bike for 5 more years. For me though, after a year of paying money, I would want to own the darn thing. It basically turns into a 6 year lease with the bike effectively worthless at the end. I wouldn’t feel like it was mine, or would want to make upgrades. I’d rather pay a bit more and own it from the beginning, with freedom to make changes and re-sell at an OK price whenever I choose. Obviously i’m the wrong kind of person for the scheme and it works for many, but it’s not that great a deal when you think beyond the bottom line costs. It’s not good value, unless you are on a higher tax bracket.

    fr0sty125
    Member

    aracer – Member
    eskay » My company gave the bikes to us (this is current as the scheme has only just ended). We just had to pay the taxable benefit.
    Given the calculated tax cost, why don’t more companies just do that instead of all the other complicated stuff? Seems the best solution for all concerned.

    If it is done like this after the 12 month lease do you effectively pay tax on the reasonable disposable value i.e. 25% so in effect as a lower rate tax payer I would pay 5%? Do you have to pay NI?

    Legoman
    Member

    See, what I don’t understand is why would I enter into a credit agreement (even a very favourable one) to buy a bike, with no guarantee that I’ll get to keep the bike at the end of it.

    All the info on the C2W website (see the link posted on first page of this thread) – says that either C2W or the employer ‘may’ offer the bike to the employee. May Offer? Why the ambiguity?

    I asked my employer what happens at the end of the scheme – they had no idea.

    For that reason, I’m out.

    Premier Icon D0NK
    Subscriber

    Just checked our C2W page and it says to make sure you insure it, how does that work then, I can’t claim for a company laptop on my home insurance so how can I claim for a company bike? and if my insurance does replace a stolen c2w bike who owns it?
    v.complicated.

    tomj
    Member

    Evan’s website has a very handy calculator which tells you the costs, savings and monthly payments depending on your price of bike, accessories and salary/tax.

    You’re not buying the bike (unlike a 0% finance) you’re leasing it – with an option to buy later

    Premier Icon MoreCashThanDash
    Subscriber

    You are all completely missing the point.

    C2W was dreamt up by a minister who was struggling to convince his wife that they could afford a new shiny bike. Even MrsMC fell for it 😆

    Premier Icon aracer
    Member

    fr0sty125 wrote:

    If it is done like this after the 12 month lease do you effectively pay tax on the reasonable disposable value i.e. 25% so in effect as a lower rate tax payer I would pay 5%? Do you have to pay NI?

    Yes – it belongs to your company and if you get given it for free at the end of the lease then it’s a benefit in kind of the disposal value. I’m not an accountant, but I believe only tax, not NI is payable on benefits in kind.

    The retailer looses 10% of the sale to the scheme, which they often cant afford, especially considering how time consuming c2w sales tend to be

    Rubbish. If they can’t afford that then they don’t need to offer C2W

    I know of at least 6 people who have purchased a bike through C2W who almost certainly would never have got a bike otherwise, retailers may ‘lose’ 10% but they are selling more bike because of it. And any sensible LBS would also use this as an opportunity to ‘upsell’ and sell clothing, luggage, service plans etc as well.

    The one thing I can say about Cyclescheme is they are very upfront with costs etc, non of this should be coming as a surprise to you now.

    See, what I don’t understand is why would I enter into a credit agreement (even a very favourable one) to buy a bike, with no guarantee that I’ll get to keep the bike at the end of it.

    All the info on the C2W website (see the link posted on first page of this thread) – says that either C2W or the employer ‘may’ offer the bike to the employee. May Offer? Why the ambiguity?

    You would not be entering into a credit agreement, you would be leasing the bike.

    If they guaranteed you would own the bike then they would be offering you credit, that is why they have to say say they ‘may’ offer to sell.

    I think in the history of C2W scheme , it is very unlikely that anyone has not owned the bike at the end of it. Certainly I have never, ever heard of this happening.

    Lots of people struggling with the concept here.

    No offence franksinatra, but many can’t afford it and can’t afford to turn away c2w business either.

    “I drink your milkshake!”

    Premier Icon DezB
    Subscriber

    Almost identical thread when I came to the end of my year.

    Do the 3% deposit, then you own the bike. Don’t worry about the 3 year thing, that’s just paperwork.
    I paid £66, shortly after received an email saying I’m eligible to start a Cyclescheme purchase again!

    Premier Icon cookeaa
    Subscriber

    Its not a Bike, its especially not YOUR bike its an “Asset” owned by the C2W scheme operator.

    HMRC got a bit huffy a couple of years ago because C2W schemes were being, oddly enough, used as a means for private individuals to acquire goods without HMRC getting their slice, the “Transfer of ownership” fees were in many cases laughably small, HMRC decreed that they wanted tax revenue’s proportionate to the actual value of the bicycle, not the price it was sold at, the bike might be sold to you for a nominal £50 but if its really “Worth £750” HMRC want tax revenue based on that.

    The work around? quite simple really – Extend that “lease period”, allowing the bike to de-value as much as possible before you transfer ownership, a 12 month old bike holds a fair bit of its original value, a 48 month old bike could (potentially) be written off or at least valued at a fraction of its original sale price…

    Essentially OP the C2W company are giving you options to try and help you avoid as much tax as possible…

    Buy the bike now if you want, extend your lease period for a nominal sum and you may pay very little in another 3 years to actually, finally own the thing, but basically, by degrees C2W will save you 1% of bugger all, so just get used to it.

    No offence franksinatra, but many can’t afford it and can’t afford to turn away c2w business either

    Exactly, better to sell bikes and lose 10% then not sell bikes at all. They just need to use a bit of initiative, and business drive to make sure they make that 10% back in other areas (risk now that we enter into a whole LBS thread)

    Or better still to give away 10% in goodwill, which could produce a return in business, than give it to a bunch of cynical arsebags who don’t care much if it’s you or the next shop.

    I agree it’s a good “in” for a sale. For the retailer though it’s the most expensive finance available, and as such sucks.

    And nooo.. no LBS thread. It’s a reasonable matter to choose between “I’ll give my money to whoever supplies me the cheapest” and “I like to know that the supplier isn’t losing out because of the way I choose to pay”.

    Premier Icon D0NK
    Subscriber

    You would not be entering into a credit agreement, you would be leasing the bike

    I’ve no doubt the paper work was all legit but the first iteration of c2w at our place was sold to us as more like a credit agreement, there was no “the bike doesn’t belong to you” it was described as we buy it for you and you buy it back tax free over 18months.

    I await all the missold c2w cases in a few years 😉

    Premier Icon MoreCashThanDash
    Subscriber

    Absolutely clear when our employer started C2W that it was a lease deal – the employers blurb, all the Cyclescheme documentation stated it clearly, there was specific reference to the payment at the end to retain the bike. I calculated the costs including the final payment, could probably have got a deal or 0% somewhere that would have got close to it, but it was a convenient way to make a small saving even after taking that into account.

    Mind you, my employer is HMRC.

    So it will be interesting when our 12 months come to an end in April/May, and I was one of the first to take it out. I shall no doubt be starting my own thread in due course…..

    Premier Icon Spud
    Subscriber

    Flaming gits at Cyclescheme decided to apply this retrospectively to current agreements when HMRC updated the rules. They didn’t need to, I argued that it wasn’t what I signed up to but was told essentially tough. I paid the fee to keep for the further period, then bought it and sold it immediately. Go to your LBS use their 0% if they do it.

    Premier Icon aracer
    Member

    Spud wrote:

    Flaming gits at Cyclescheme decided to apply this retrospectively to current agreements when HMRC updated the rules. They didn’t need to, I argued that it wasn’t what I signed up to but was told essentially tough.

    You were probably told that you misunderstood what you signed up to (as above, it is a lease, with no obligation on them what happens at the end of it).

    shotsaway
    Member

    See, what I don’t understand is why would I enter into a credit agreement (even a very favourable one) to buy a bike, with no guarantee that I’ll get to keep the bike at the end of it.

    All the info on the C2W website (see the link posted on first page of this thread) – says that either C2W or the employer ‘may’ offer the bike to the employee. May Offer? Why the ambiguity?

    I asked my employer what happens at the end of the scheme – they had no idea.

    For that reason, I’m out.

    There isn’t any ambiguity. It is common for cycles provided under salary sacrifice arrangements to be sold or transferred to employees after the end of a period of loan. The income tax and NI exemption for certain loaned cycles will be prevented from applying if any agreement builds in from the outset an automatic transfer of ownership to the employee at the end of a loan or hire period . However, where this is not the case, there is no contradiction in an earlier exempt loan being followed by a decision by the employee to buy the cycle.

    Premier Icon Sandwich
    Subscriber

    Not if you are P-X, who helpfully pass it on directly to the ‘customer’ at the point of the ‘hire’

    That’s compensation for dealing with PlanetX! 😀

    Premier Icon winston
    Subscriber

    spud

    same thing happened to me – had a bike on the scheme (a folder that I did use everyday for work, not a bling 140mm travel ‘commuter’) and HMRC changed th rules halfway through. Because the whole ‘extend the lease’ hadn’t been dreamt up and there were only a couple of us on the scheme my employer simply said this is too complex and stopped running the scheme and I was left with a £250 bill for some reason – in the end my bike was RRP £975 and cost me about £920! I might as well have gone for a special deal or 0% etc.

    I argued the toss and my employers ended up footing the bill and I just paid the tax on it as a BIK

    Great scheme cocked up

    Bike shops also pay a premium for 0% finance.

    I’ve seen a few that operate a similar no or little discount policy on Finance and Cyclescheme.

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