Cycleplus ( cycle to work). A bit confused.

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kiwifruit

Über Member
Location
Kent
Hi

Am thinking about getting another bike, but this time getting through Cycleplus. Are they really worth it? After reading some information say for example a £1000 bike, I would pay £56.67 over 12 months total £680. Yes that is a saving but then pay 25% to take ownership of the bike and that's another £250 making a total of £930 is not really a saving.

I phone cycleplus scheme this morning about this final payment, she asked me which company I worked for. I gave her the details and said we don't deal with final payment on behave of this company saying I need to contact my HR department. I phone headoffice spoke to the lady that deals with it. She said after 12 months we can transfer of ownership at 7%. Bit confused I said is that after 4 years? No she said is 12 months. Ok I thought it was 25%. I did say to her I have been reading some information and I read the chart to her (see below)
cycle-to-work-table.jpg

So am bit confused, can some one clarify this for me.

I do apologise as my English is not that good.

Thanks
 

Pale Rider

Legendary Member
No surprise you are confused, the cycle to work scheme is ridiculously complicated so anyone would have trouble understanding it.

As you have discovered, the benefit of the scheme can be minimal if all the rules - particularly the final purchase - are followed to the letter.

However, it seems to me many employers are not too fussed/forget/can't be bothered about the last payment, or, as in your case, don't ask for very much.

My understanding is the final payment should be based on an agreed depreciated value of the bike.

So whether it's seven or 25 percent, it will be seven or 25 percent of the depreciated value, not the purchase price.

In that case, the final payment may be no more than a few pounds.
 

cyberknight

As long as I breathe, I attack.
No surprise you are confused, the cycle to work scheme is ridiculously complicated so anyone would have trouble understanding it.

As you have discovered, the benefit of the scheme can be minimal if all the rules - particularly the final purchase - are followed to the letter.

However, it seems to me many employers are not too fussed/forget/can't be bothered about the last payment, or, as in your case, don't ask for very much.

My understanding is the final payment should be based on an agreed depreciated value of the bike.

So whether it's seven or 25 percent, it will be seven or 25 percent of the depreciated value, not the purchase price.

In that case, the final payment may be no more than a few pounds.
Our company charges you £30 to keep the bike but then then final value payment is classed as a taxable benefit so they claw it back on your tax over the next year .
 
My understanding is the final payment should be based on an agreed depreciated value of the bike.

So whether it's seven or 25 percent, it will be seven or 25 percent of the depreciated value, not the purchase price.

In that case, the final payment may be no more than a few pounds.
But in that table, it is an agreed depreciation value. Which is why the value decreases over time, as the % of the purchase price is accounting for the depreciation.
 

Pale Rider

Legendary Member
Our company charges you £30 to keep the bike but then then final value payment is classed as a taxable benefit so they claw it back on your tax over the next year .

Eek, more complications.

Another point for the OP to consider is cycle to work bikes are usually sold at full price, whereas the retailer might offer a discount of about 10 percent on the same bike for cash.

It's one of the reasons why a Brompton is often a good prospect on cycle to work because the cash price is the same.
 
OP
OP
kiwifruit

kiwifruit

Über Member
Location
Kent
This is even more complicated. So do I pay the 7% or 25%? If is 7% I seriously consider the scheme, but @ 25% is not worth it.
 

cyberknight

As long as I breathe, I attack.
Eek, more complications.

Another point for the OP to consider is cycle to work bikes are usually sold at full price, whereas the retailer might offer a discount of about 10 percent on the same bike for cash.

It's one of the reasons why a Brompton is often a good prospect on cycle to work because the cash price is the same.
Indeed , if i was in a position to get a new bike ( yeah right like mrs ck is letting that happen ) i would be looking at getting an interest free loan or use a 12 month no interest credit card .I think planet x or ribble might even work out cheaper with the interest as there pricing is so good.

Reality check though it would be cycle to work as a way for me though as its the only way i will get one , 2018 marks a age related benchmark so im going to push for one then :smile:
 
This is even more complicated. So do I pay the 7% or 25%? If is 7% I seriously consider the scheme, but @ 25% is not worth it.
Even at 25% you get the discount on the bike, but IIRC the monthly payment comes out of your wages BEFORE tax. So you get some savings in tax too.

It's also worth noting that it may not seem "worth it". As the scheme isn't designed to get you a cheap bike, it is designed to help encourage people to cycle to work, by assisting in the purchase of a bike to do it
 
The problem is that the scheme was supposed to encourage employers to provide bicycles for employees to commute on. It was rapidly subverted by cyclists seeking to acquire n+1 with a subsidy.

A nice solution would be a lower VAT rate on bicycles. Then there's no need for the scheme, everybody benefits in the same way, and those who work somewhere with no cycle to work scheme can take advantage too.
 

JtB

Prepare a way for the Lord
Location
North Hampshire
If you earn £1000 gross and pay tax at 20% you can take your gross earnings minus the tax payable and purchase a £800 bike at your LBS. That could equate to an £888 bike discounted by 10%. Alteratively you could take your gross earnings and purchase a £1000 bike through your C2W scheme. Not only do you get more bike for your gross earnings, but you also get a 12 month interest free loan. The downside however is that you don't know what the final payment will be until you get to the end of the term (in my case the final payment was £0.00).

Edit: Used correct basic rate income tax (20%) in the above calculation.
 
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mythste

Veteran
Location
Manchester
Have any of your colleagues used the scheme before? At the end of my term the residual value or whatever was written off as gift in kind.
 

glasgowcyclist

Charming but somewhat feckless
Location
Scotland
If you earn £1000 gross and pay tax at 25% you can take your gross earnings minus the tax payable and purchase a £750 bike at your LBS. That could equate to an £833 bike discounted by 10%. Alteratively you could take your gross earnings and purchase a £1000 bike through your C2W scheme. Not only do you get more bike for your gross earnings, but you also get a 12 month interest free loan. The dowside however is that you don't know what the final payment will be until you get to the end of the term (in my experience the second hand payment was £0.00).

Rather than an interest free loan it's a hire purchase scheme; you don't own the bike until the final transfer payment is made.

Also, if it's lost or stolen before it's paid for you'll need to replace it at your own cost to be allowed to continue to make the salary sacrifice payments. If the bike is stolen and not replaced, that constitutes ceasing the hire agreement and all outstanding payments may be taken from your next pay.

I'd rather negotiate a deal with my LBS.

GC
 

BrianC

Well-Known Member
Location
Erskine
to be honest it depends on your employer and the rules stated by others are correct. I've had several bikes through mine all paid off no final payments . still getting a voucher every couple years to purchase wheels, and other bike parts when needed. So i can'r praise the scheme enough you save money its a no brainier in my eyes
 
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