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Cycle to work scheme.

bazuti 06 Oct 22:09  

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I made enquiries about the above in 2007.Until 6 yrs. ago commute was only 3miles, long way round - 2.2miles shortest. walking was an option.-7-8.5 miles currently.
The reason given for not subscribing was final salary pension scheme?
I am aware of a freind who works for a printing group same pension scheme, who was able to purchase a entry level road bike saving 43%
of the cost.
Since '96 I have only bought one new bike, nearly new will always suffice, but with the scheme a new one would be my choice.
Thoughts on a postcard please!


My Latest Route: Aug 2010 Birmingham to Stafford Canal Loop
dudley 07 Oct 09:20  

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if he saved 43%, he is probably higher tax band.
either way, you save though.

not sure how a final salary scheme would prevent subscription. This sounds like a cop out to avoid any hassle.
It shouldn't cost your Company anything bar minor administration costs.


there are different ways of administering the scheme.
you can do it yourself for small companies, or farm it out to a provider.
There are different providers offering different schemes.

Some require that you purchase from Halfords and/or Evans for National coverage, and some specialise in local bike shops.
Even with the big stores, i believe they have to get you what you want, even if it isn't there standard stock, so dont think you have to buy a Halfords special.

the costs are spread over a year, taken from your salary monthly pre-tax.
If you are higher rate, a £1,000 bike will cost you arounf £50 a month for one year.
There is no check to see if you are using it for work, and you can usually purchase it from the company after 2 years for three peanuts and a bottle of vimto. (a nominal amount)

There is nothing to stop you buying something wholly inadequate for commuting if you want - full suspension off-road beast, or full carbon racing machine. No kids bikes, though!

It is a good scheme, whichever way you look at it.


below is one such scheme (using local shops) and it has a calculator on the front page to give you specific figures


My Latest Route: Nov 2009 Forth Estuary Circular

dudley 07 Oct 09:23  

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sorry!

here it is
http://www.cyclescheme.co.uk/

My Latest Route: Nov 2009 Forth Estuary Circular

bazuti 07 Oct 11:46  

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I think he might have a chortle at the higher tax band.
It should be tax + ni contributions. 43% does sound a little generous.

I am up to speed with how the scheme works.

The bottom line is getting someone at HQ to show some interest. I just thought someone may have experienced this specific set of circumstances.
The savings attached to this green paper are of a greater value in the childcare section. Further savings exist for using PC's at home.

My Latest Route: Aug 2010 Birmingham to Stafford Canal Loop

mattk 07 Oct 12:12  

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Hi Bazuti,

I'd agree with you that you ultimately need to talk your workplaces admin into doing a little work, but if you did the leg work to find a bit of info ie. contact numbers and email addresses they need get the ball rolling - I don't see why they wouldn't sort it for you. The benefits for them to sign up include savings on their Nat Ins contributions, Staff loyalty because they own the bike until payments are completed, they can claim back VAT because the bikes are a business asset, frees up parking spaces, and because you'll be getting some decent exercise in the fresh air - you'll probably be ill less.

The best bet would be to get them to register for the scheme but not to do any deals with any particular shops. That way you get the better deal (not the shop). There are some shops like Evans Cycles that will give you a further percentage off the bike (according to them upto total of 50% off).

My Latest Route: Feb 2010 National Cycle Network 15 NCN

bazuti 07 Oct 13:46  

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I think all of this comes into the same category as hsp. appts. diagnosing illness's and police matters. If you want a result; do it yourself!

We have a new MD, so I will give it a whirl.

I do not feel too disadvantaged, in Dec. 2007 I bought A Gary Fisher Cronus(receipt and proof of purchase Evans cycles) from the E-something site, 9 weeks old for less than half the purchase price.I took a small gamble, 130 mile round trip to fetch it, has proved to be a swift urban bike.

However the route is to get more people on the CTW scheme.

My Latest Route: Aug 2010 Birmingham to Stafford Canal Loop

davedenday49 24 Oct 19:11  

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Hi everyone new to this web site, i got my bike through the cycle to work scheme i borrowed £300.00 from Haringey council (wish i had asked for more) i got a £250.00 mountain bike from Halfords( only had a choice of 3 shops Halfords was the nearest )spent the other £50.00 on warrenty plus extras, lights, bike tool.
I pay £21.00 a month out my wages before tax i think it works out at the end of the 12 months i pay back about £260.00.
Now iam hooked on cycling i want a good road bike wish i had asked for a £1000.00, oh well i may ask again next year.


RonnieG 26 Oct 10:56  

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If I'm not mstaken. The reason the Pension scheme may have prohibited getting a C2W entry is minimum wage restraints.

Some Pension schemes deduct at gross
The cycle to work also deducts at gross. If the remaining figure divided by your hours results in below minimum pay scales prior to other deductions it can't happen.


And yes agree..... once you start paying it back you wonder why you never took greater advantage of it (£800+). Never mind there is always next year after this one finished. Just think, in about 4 years time you'll have a stable of great bikes in the garage.

Rg


spoken 26 Jul 18:32  

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Bumping this old thread, rather than starting a new one as I'm completely baffled by the changes to the scheme introduced last year, at the behest of HM Revenue & Customs and how it treats the tax status of this.

I've just come to the end of my first scheme and have received a letter inviting me to purchase the bike for a staggering 1/3 of its original value (I doubt I'd get that much on eBay) or extend the hire agreement for a further 36 (!) months for a single payment roughly equivalent to what I was paying a month, or return the bike.

The information sent by Cyclescheme was really lacking in appropriate detail. Can any experts explain what the heck is going on?

My Latest Route: Aug 2010 Hammersmith to Hampton Court

dudley 26 Jul 19:47  

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after 5 years, the value is written off.
Look at HMRC or scheme websites that give the actual percentages per year.

Try and sell it after the year's hire period and it will hurt - 25% of value (having paid over 50% already)

After 5 years it's yours. If you bought a bike at £200, it is worth nothing anyway. If you bought one at £1,000, it will still have a reasonable value after 5.

There were people paying £550 for a £1000 bike, getting it off the company after a year for £10, then selling for £600 and making a profit. The new rules stop this (quite rightly) There have to be rules to stop the abuse.

My Latest Route: Nov 2009 Forth Estuary Circular

smokie 27 Jul 10:09  

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You don't have to buy it straight away as long as you are stil working for the company.
Just continue letting the company own it untill the value is worthless and then you buy it of the company you are working for nothing. Approx 5years as per HMC guidelines.


BusterG 27 Jul 12:35  

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Hi All
Smokie I think the problem is that the companies can now offload the management of the Bike to Work scheme to 3rd parties. making the 3rd party the owner of the bike and rules a lot fuzzier about how much they can charge and for how long.

Hopefully the info below (from another members only site) will help.
Hope it helps.
Buster

*********************************

Some of you may know this already but anyway...

The Cycle to Work scheme is a tax exemption initiative introduced by the government in 1999.

The way the scheme works (or has worked) is that the employee signs up to the scheme through their employer. The employer buys the bike (of the employee's choosing) by way of issuing the employee with a voucher to redeem at the bike shop. Most employers, whilst they want to promote the scheme to their employees, are afraid of all the complexities and thus over 8500 companies have delegated the admin to a private company called Cyclescheme (there are others but they are not as successful).

The tax exemptions works thus:
Tax saving for those earning above £43,876* = 40%
Tax saving for those earning below £43,876* = 20%
National Insurance saving = 11%*
VAT saving if employer is VAT registered = 17.5% currently
*These may vary according to personal circumstances
Transfer of ownership of bike at end of 12 months according to "fair market value" plus VAT

So for a bike of £1000:
VAT registered company + higher tax bracket saves 58.5% and then pays for transfer of ownership (the secondary agreement).
VAT registered company + lower tax bracket saves 38.5% and then pays for transfer of ownership.
non-VAT registered company (all civil servants, education and NHS employees) + higher tax bracket saves 51% and then pays for transfer of ownership.
non-VAT registered company (all civil servants, education and NHS employees) + lower tax bracket saves 31% and then pays for transfer of ownership.


SO WHY THE WARNING...

Well in the first place Cyclescheme charge the retailer a 10% levy on the price of the bike. Thus bike shops will not discount a bike through the scheme to the level they will do for a direct sale. This was the situation for me, the bike cost £60 more through the scheme.

When I signed up to the scheme (Oct 2009) I was told by both Cyclescheme and my employer that the transfer fee at the end would be 5%, i.e. £50. However the small print of the agreement actually stated that it would be at the fair market value plus VAT (not that I looked at the small print at the time).

Following large scale take up of the scheme (Rolls Royce purchased £1.2M worth of bikes for employees) HMRC looked at the benefit employees were receiving and judged they were beyond what was intended by the scheme as by transferring the bike at 5% the employee was getting a 'benefit in kind' (i.e. tax avoidance). Therefore in August 2010 HMRC issued this guidance for valuation of bikes: http://www.hmrc.gov.uk/manuals/eimanual/eim21667a.htm
As you can see they are advising that a £1000 bike after a year should be sold to the employee for 25% of it's original value.

(removed scanned letter)

To say I was p***ed off was an understatement. Cyclescheme as a private company are now making 35% on every scheme they pushed some paper on. What's worse is that many employers automatically sell the bike at the end of 12 months onto Cyclescheme for £1 only then for Cyclescheme to ask me for £250 for the same bike and I have to deal with a commercial company instead of my employer.

Anyway I fought them on the basis:
"If employers chose to use lower values, it would remain open to HMRC to challenge these and the employer or employee (as appropriate) would need to be able to provide evidence in support of these values i.e. to demonstrate that the employee could have realised no more than these sums from sale or disposal of the cycle." (HMRC)
I provided receipts of everything I have worn out and replaced on the bike in the year and a photo of a very muddy looking bike.
Glad to say I won my battle and now am settling for a £63 transfer but this was a difficult battle and should act as a warning to anyone else already in the scheme or thinking to joining. It is still worthwhile for some people in some circumstances but the gains for everyone are not as good as they once were and for many people there are no gains.
Final bit of advice, if providing evidence of condition of bike don't clean it!

My Latest Route: Oct 2013 Liss

sdwalker 27 Jul 13:14  

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just want to clarify, i am currently on the CTW have a £400 spend and am paying like £23 a month which totals the whole cost of the £400 at the end of the payment window - a small amount of tax rebate basically after 3 years my bike will be worthless but they will still be requestying money if I want to buy the bike off them. i think i will just give it back and get a nice shiny new one thank you very much

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dudley 27 Jul 16:49  

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first i've heard of people being 'forced' to buy the bike after a year.

As far as i'm concerned, the bike belongs to the Company, I have paid my HP over a year, and should i wish to buy it off the Company, (when I want, not when they want) there is a standard sliding (and sensible) scale of cost provided by HMRC guidance for a bike in average condition, tailing out at £0.00 after 5 years.

I will be taking my bike off the company after 5 years, paying nothing for the privilege.



My Latest Route: Nov 2009 Forth Estuary Circular